Mar­kets May Re­main In Re­cov­ery Mode For Some More Time

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In the wake of de­fen­sive buy­ing in safe haven sec­tors such as debt, com­modi­ties, etc., In­dian stock mar­kets some­how got ne­glected by the mar­ket par­tic­i­pants dur­ing last week. Per­sis­tent rise in the global oil prices has led to pes­simism in the mar­kets. De­spite the daily am­bi­gu­ity be­tween OPEC and the US, oil prices have re­mained more or less sta­ble af­ter hit­ting al­most a yearly high of USD 64.5 per bar­rel. There was an abrupt surge of 9.62 mil­lion bar­rels on a sin­gle day in the US crude oil pro­duc­tion, but this was off­set by the un­in­ter­rupted pro­duc­tion cut by OPEC which would per­sist till the end of Novem­ber 2017. Crude is ex­pected to hit USD 70 or even USD 100 per bar­rel in the medium term.

All-in-all, In­dian mar­kets saw a sell-off in oil-de­pen­dent sec­tors such as oil mar­ket­ing com­pa­nies, air­lines, met­als, among oth­ers. How­ever, fresh buy­ing was wit­nessed in stocks of many other sec­tors, which main­tained a rise in the net eq­uity in­vest­ments of Rs 50,331.69 crore and Rs 74,892.63 crore of the gross buy­ing dur­ing 2017 by the FIIs and DIIs, re­spec­tively. On the global front too, ma­jor world in­dices are off their all-time highs, with the US hit­ting two-month low amid fall in bond yields and eq­uity val­u­a­tion wor­ries. On the other hand, gold has been glit­ter­ing since the rise in crude oil prices and also ahead of the US con­sumer data. The US CPI rose 0.1%, but ex­clud­ing food and en­ergy, it has risen 0.2%, while re­tail sales too un­ex­pect­edly rose 0.2%. Both CPI and re­tails sales data have cued a rate hike next month.

Even on the do­mes­tic front, the coun­try’s whole­sale price in­dex (WPI) rose to a six-month high of 3.59% in Oc­to­ber, as against 2.6% rise last month and 1.27% in the same month of the pre­vi­ous year. The rise in veg­etable prices, specif­i­cally onions and rag­ing oil prices led to a spike in the WPI. The CPI too ac­cel­er­ated to its 7-month high at 3.58%, as against 3.28% in Septem­ber.

Go­ing for­ward, on a pro­vi­sional ba­sis, mar­kets have wit­nessed some short cov­er­ing in the re­cent ses­sion af­ter the fall for three con­sec­u­tive three day and are likely to re­main in the re­cov­ery zone for some more time. The GST Coun­cil's de­ci­sion to cut down rates of more than 200 items in the 28% GST rate bracket to 18% is a clear boost to the busi­nesses which have been strug­gling so far to cope up with the GST roll-out. This could be a big pos­i­tive for the govern­ment ahead of the Gu­jarat elec­tions.

More­over, the last leg of Septem­ber earn­ings sea­son is still left with over 100 com­pa­nies which are yet to de­clare their earn­ings. The earn­ings re­ports of these com­pa­nies are ex­pected to drive the mar­kets in the com­ing ses­sions.

To sum up, mar­kets are lack­ing pos­i­tive trig­gers for now, but are likely to see some more re­cov­ery go­ing for­ward. How­ever, in­vestors would hes­i­tate to go for fresh buy­ing at these lev­els, un­less there is a con­fir­ma­tion of a prom­i­nent up­side. In­vestors can grab a good op­por­tu­nity of buy­ing on dips, while traders are sug­gested to re­main watch­ful while pick­ing up a stock for ex­pected mo­men­tum.

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