There is a lot going on in the financial markets and a lot have happened this week across several fronts. From the wild swings on the key indices to the trends specific to the sectors, we provide an in-depth analysis of this week’s update on the markets.
Share Market Analysis: Key Observations
Indian share market was volatile in yesterday’s trading session as Sensex nosedived by 2011 points to settle at 81,508 while Nifty sank by 59 points to 24,619. All the indices followed suit with the Bank Nifty losing 102 points, to close at 53,408. Nevertheless, the losing streak ended with stocks experiencing range-bound movements where buying volume around the support failed the downwards test and selling volume near the resistance pushed prices downward.
The activities in the market this week suggest further turbulence as global and even domestic market indicators continue to confuse investors.
Stock Market Recovery & Consolidation
Over the last 14 days Nifty has progressed by 3.2 percent while Bank Nifty has posted improvements of 4.6 percent. It also is important to highlight that mid-cap and small-cap indices rallied 6.7 percent and 9.7 percent as well. This quantity of expansion is usually accomplished over a few months, but the sudden increases indicate that consolidation will be required.
Let it be clear to investors that given that roughly the large portion of growth recorded in and around the resistance zones, this is at best a corrective growth and not a trend strengthening movement.
Sector Outlook: Focusing on FMCG and pharma
FMCG Sector Challenges
In India, investor confidence has been shaken, and this has hindered the growth of the FMCG sector. If you are a long term investor, this space must be taken seriously as these issues pose a risk.
Impact of US Legislation on the Pharma Sector
There has been a significant development impacting the CDMO segment of the pharma sector. The US Senate passed a UK bill by significant numbers, spelling trouble for Indian pharma as they forward further regulating Indian pharmaceutical companies. This aided the fall of Laurus Labs and other such stocks too faced a downward trend.
Within the pharma space, one needs to pay close attention to such developments as well as their investments from a regulatory perspective.
Global Factors and Geopolitical Conflict
While the rest of the global markets report mixed trends, geopolitical tensions have undermined most of them. Specific issues include:
Syrian Conflict: The growing conflict and the geopolitical tensions between USA and Russia could add a new level of uncertainty into the marketplace.
Chinese Monetary Stance: In a major announcement, China signaled its intent to bash up easy monetary policy for the first time in 14 years. The Hong Kong market started rising by 3 percent following the announcement as hopes for economic growth emerged.
Undertones of FII Operations and the Domestic Market
FIIs seem to have net outflows of ₹1830 crore, however this seems to be incited due to unfulfilled decision to cut rates during the recent performance. This can be classified as temporary selling for the time being.
In recent months, FII activity has been attributed to great importance in regards to the overall stability of the market. In the near-term period, there are indicators that such participant participants will become more optimistic as they see that short positions are being reduced.
Thriving Indices of Growth & Determination that will Benefit Long Term Investors
The Indian market scenario is more favourable than adverse proportionately. Investors willing to bag the Indian market for a long – time will have positive prospects as the strong core drivers more than counter the weak short – term trends which are:
Growing amount of foreign investments in the economy.
Growing levels of critical macroeconomic variables.
Possibility of growth in promising businesses such as renewable energy and technology.
Legal Developments: New Regulations Issued by the SEBI
SEBI issued a new directive that governs the provision of educational services and market advice. Under these new rules, stock educators must be instructed to use historical data or refrain from using any current references to stock prices. The objective of this initiative is to prevent the blurring of the boundaries between investment advice and educational information, thus improving transparency and confidence among investors.
Summary: Investment Schemes for the Investors
In turbulent markets, investors adopted a relax and are active investors as opposed to passive ones. Such a paradigm shift goes hand in hand with the following advices:
Persisting on the lookout for sectoral opportunities, especially within the FMCG and pharma sectors.
Being ready to accost mid-cap and small-cap stocks in the aftermath of a correction.
Tracking worldwide changes and their potential consequences in the Indian market.
If investors are cognizant and flexible, they can comprehend the intricacies of the market of today and look for avenues for growth.
