Stock Watch: Market snaps its 3 straight-week downfalls
By Amit Sinha*
Weekly Insights – Technical
24 March – 31 March
Indian Stock Market Indices status as of day closing 31st March, 2023:
Sensex: 58,991 (+1031.4) +1.78%
Nifty 50: 17,359 (+279.05) +1.63%
Nifty Bank: 40,608 (+698.5) +1.75%
Finally, the stock market snapped its 3 straight-week downfalls and Indian stock indices saw a stellar upsurge last week which was the last trading week of the financial year 2022-23. The FIIs (Foreign institutional investors) and DIIs (Domestic institutional investors) buying in equities worth Rs. 2243 crores and Rs. 4955 crores respectively changed the trend in the weekly time frame. With this, the Indian stock market has snapped its 3 straight-week downfalls and looks cautiously optimistic ahead.
Positive global cues with respect to the easing crisis in the banking sector and the ricochet seen on FIIs buying and exiting their short positions slowly have encouraged the DIIs into buying and regaining their confidence in the equity market. Most of the substantial buying was seen in Reliance Industries, TCS, Infosys and HDFC twins (HDFC Bank and HDFC Ltd). This accumulative buying attributed significantly to the market upswing after the previous three weeks’ downfalls.
Reliance Industries was up almost 4% in the last trading session on the news that the company has initiated demerging process of its financial services business and has called for shareholders and creditors meeting to shape this effect.
US Stock Market – Wall Street the early last week posted good gains amidst financial news and economic data releases. The Bank stocks advanced reacting to a set of new proposed regulations by the Joe Biden administration which aims to do more stress-test on their mid-sized banks, the potential new rules strive to impose more stringent capital and liquidity requirements. The new regulations in mid-size banks will be more in line with the restrictions faced by the country’s largest banks which will help in facing a wide range of market scenarios in future. Over the weekend, International Monetary Fund Chief Kristalina Georgie said in a speech that risks to financial stability have increased, although actions by advanced economies have calmed the current market stress.
Nifty50 chart on weekly time frame as of 31st March 2023 (closing)
Next Week Market/Trading Session Outlook
Overall the Indian market sentiment has improved in favour of bulls who look to have regained strength over the last week due to a positive outlook around the world; mainly seen in stock markets in the USA and China.
Most of the negative news about the banking crisis, inflation worries and the geo-political challenging environment have already been factored into the market now. With no further unseen events that could possibly have an impact, the market looks bullish in the coming week and monthly time frame.
India’s only fierce competition with respect to alluring FIIs buying into Dalal Street is capped due to China’s opening up and its extensive growth outlook, which is poised by stimulated consumption and international business commitment. The IMF has projected that China’s economy would grow 5.2% this year, while global growth would slow down to below 3.0%. Last year, China’s GDP grew by 3.0%, one of its lowest levels on record. So, FIIs see stronger and faster growth potential in China vis-à-vis India.
Spotlight
RIL (RELIANCE INDUSTRIES LTD) in a regulatory update, has convened a meeting on May 2, 2023, of its shareholders and creditors to seek their approval for demerging their financial services business – RSIL (Reliance Strategic Investments). Post demerger, it will be rechristened to JFSL (Jio Financial Services Limited). RIL (Reliance Industries Ltd) will issue one share of the demerged company with a value of Rs 10 each for every share held in RIL. The appointed date for the demerger is March 31, 2023. This news is very positive for RIL, its shareholders and also the Indian Stock Market as it holds 10.5% in weightage in Nifty 50.
The market is looking positive and bulls seem to be taking a grip strongly by buying every dip in the stock prices. “Buy on Dips” is the mantra in the shorter and longer time frame. With this upswing, positive momentum and pace, the market may regain its earlier lifetime high of December 2022 in the month of April or May 2023.
Disclaimer: The opinions expressed within the content are solely the author’s (not a SEBI registered advisor) and do not reflect the opinions and beliefs of the website or its affiliates. You should consult a qualified broker or an independent financial advisor before making any investment.
*The writer is a long-term investor/trader. The views expressed are personal.
