Sep 28 2018

Indian Equities

Indian equities have been extremely turbulent in the September series with volatility index hitting over 17 level. However, it ended at 16.62 in the last session. Just when investorsstarted, believing very strongly that Nifty would hit 12,000 and Sensex 40,000 mark soon it made a dramatic turn and started heading lower, sharply lower. Sensex has fallen nearly 2,000 points, about 5 %, so far in the month of September whereas Nifty ended below 11,000-mark as well in September series. FIIs have pulled out more than Rs 12,000 crore from Indian capital markets so far in the month of September.

Primary reasons for the mammoth fall are sharp depreciation in Rupee, higher crude oil prices, stretched valuations and to some extent lower-than-expected GST collections. To add to the gloom we had US Fed hiking interest rates by 25 basis points this week. A closer analysis shows stocks having significant shareholding of foreign portfolio investors have witnessed higher outflows and it may see further unwinding from FIIs due to macro headwinds in the near term.

Technical Outlook and Nifty F &O:

Currently, indices remain under pressure as even recent measures by Government and RBI have failed to enthuse confidence among investors and Nifty resisted moving beyond even 11,100 mark convincingly this week. It has to sustain 10,950 levels else,it is likely to move down to 10,865 and then 10,790. On the options front, maximum Call OI was seen at the 11,200 strike price, which will act as a crucial resistance level for the October series, followed by the 11,100 and 11,000 strikes while maximum Put OI was seen at the 10,900 strike, which will act as a crucial support level for the October series, followed by the 10,800 and 10,700 strikes.

Returns – NIFTY 50
YTD : 4.24% 1 Week: -1.60% 1 Month: -5.50% 3 Months: 2.60%
6 Months: 9.10% 1 Year : 12.00% 2 Year : 26.70% 3 Year : 41.80%

 

Simple Moving Averages
30 Days : 11,441 50 Days : 11,345 150 Days : 10,817 200 Days : 10,759

 

Returns – Sensex
YTD : 6.66% 1 Week: -1.40% 1 Month: -6.10% 3 Months: 3.10%
6 Months: 9.50% 1 Year : 16.60% 2 Year : 28.70% 3 Year : 41.80%

 

Simple Moving Averages
30 Days : 37,827 50 Days : 37,562 150 Days : 35,607 200 Days : 35,305

 

MFE In house View: In the short to mid-term Indian equity is expected to remain under pressure and as India moves closer to assembly elections around December and then general elections around May 2019, the volatility is only going to rise. However, as the indices have fallen sharply in September series a technical bounce back is very much likely. A rise of about 300 points in Nifty and about 800 points is Sensex is a very strong possibility in the October series. The “Game is On”!