Markets likely to witness high volatility
Markets likely to witness high volatility

The November month gave some relief to the investors with positive data points and the benchmark indices on recovery mode.  The Sensex recovered 1,213 points and Nifty rose by 350 points in last one month.

As we pointed out earlier, November ended on a positive note, but December may not be the same. After market closed on Friday, many Economic data data points poured in. And they are all negative in terms growth. 

The GDP slowed down to 7.1 per cent, forex reserves were down by $25 billion, Fiscal deficit deteriorated and finally, GST collections are below the expectation. With the disappointing economic data points, the market may read some pessimistic views. With five state election results are just seven trading session away, the market players are not in a position to take risks.

Any negative results for the ruling party at the centre may heavily dampen the sentiment. Globally, the G-20 Summit is expected to give some clarity on the trade war front, as China-USA heads of the state meeting to sort out the issues related to trade tariffs. The Brexit impact is yet to be known as there is no clarity about the trade relations with European nations.

There are some feel-good factors which moved market higher side. Among them is  the much-discussed RBI-Centre’s tussle which cooled off. The RBI Governor finally came out with view on demonetisation saying that its impact was transient, and the economy is robust.  The corporate earnings are in line with our expectation as most of the quality stocks able to give a decent 20 per cent EPS growth.

Technically, Nifty reached above the long-term moving 200 dma and medium-term average 50 dma. It exactly retraced 50 per cent of the previous fall from 10760. Looking at the indicators, there are no negative divergences visible and still in the bullish zone. The stochastic oscillator is 
in overbought zone, the probability of push Nifty downside is high. 

The market may witness high volatility in a whole while December month will crucial for next directional move. Nifty must move above 10882 level to continue the uptrend. Otherwise, if the bears control the market then, 10710 level is crucial for the long positions. Keep mind in these two levels.

Multiple factors pointing toward smart money movement into the FMCG sector. Follow-through day in Nifty FMCG on November 19 (marks beginning of new uptrend). Industry Group Ranks within sector showing consistent improvement in past few weeks. Focus on some high-quality consumption names to build the defensive portfolio. (Hans Research Team)

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