Friday Round Up

27th December 2019

  • In a truncated week (Holiday on Dec 25 due to Christmas) markets fell on Tuesday and Thursday but recovered most of the losses on Friday. The weakness early in the week was partly led by F&O expiry due on Thursday (the last such expiry in the calendar year). Ultimately the Nifty ended 0.2% lower for the week. Metals and Media were the only gainers in NSE sectoral indices wile Energy, Infra and Bank Nifty indices were losers. Advance decline ratios improved (though remaining below 1:1 on Monday and Tuesday) denoting broadening of the rally. Volumes were below normal in a week when a lot of market participants were on holiday.

  • Markets reacted to the Jharkhand state election outcome (negative for BJP/NDA) on Monday and the subdued mood continued over the next two days. 

  • The RBI announced the second round of Operation Twist like operation on coming Monday when it would buy government securities (G-Secs) of 10-year tenure and at the same time sell government bonds of up to one-year tenure, both worth Rs.10000 cr each. This is with an aim to help transmission of lower interest rates across the system. The 10 Year G-sec yield fell 7.5 bps to 6.50% today. PSU Banks’ stock prices rose as they would benefit out of this as they have large Gsec book on which they could book MTM gains due to this yield fall.

  • There were reports that BPCL divestment could get delayed beyond March 2019. This also increased the possibility of the Govt not achieving the divestment target of Rs.1.05 lac cr for FY20. This also led to subdued sentiments in the markets.

  • FPIs were large buyers early in the week, but later turned small sellers in a week when their participation was anyway limited.

  • ICICI Sec rose 17.3% on institutional buying as the industry is moving towards consolidation with larger players benefiting out of tightened regulation. Shift of buying by institutions to quality midcaps also helped the rise in stock price of ISec.

  • Auto Ancillaries had another good day after seeing some buying on Thursday. Over the week many Auto Ancillaries rose sharply due to bottom fishing by investors. The midcap sector could now see rotational buying among sectors as quite a few have fallen to very attractive levels. Sugar stocks could be the next in line as first indications were available today.

  • Nifty seems headed towards 12800 over Jan-Feb. The coming week could see some more broadening of buying though frontline indices may not see large moves. From the week beginning Jan 06 we could see return of all players and volatility and volumes back again in markets.

  • Metals, BFSI, PSU and midcap sectors could do well in the coming week.

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