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Weekly Outlook India Markets: NIFTY, BANK NIFTY, NIFTY INFRA

Updated: Dec 9, 2019

Weekly Summary India Markets:


  • Overall week remained bullish, with NIFTY rallying above prior supply zone at 12025 - 12100

  • NIFTY hit a new all-time high on Thursday 28th November at 12158.8 but lost over a hundred points the following day after testing key level near 12000

  • NIFTY INFRA – Infrastructure sector index which appeared stronger than NIFTY until October has now been significantly weaker than NIFTY and BANK NIFTY

  • Disappointing GDP data that was published on 29th November after market close weighs on the market

Indian Markets - Dalal Street

For past few weeks NIFTY has been posting higher highs and has posted a new all time high in past week. The other index – BANK NIFTY – also echoes the sentiments, and has posted new high.


DAILY CHART NIFTY INDEX

NIFTY Daily Price Chart

DAILY CHART NIFTY BANK INDEX

NIFTY BANK Daily Price Chart

However, there are a few important observations about these rallies that make us wonder about the real strength in the market. Firstly, the quantum of the rallies has not been as strong as it was in the past. In September – October, the rallies would last for a few hundred points before the markets would pullback. Contrary to that, for most of November NIFTY moved sideways to slightly up.


Secondly, among the sector indices – other than BANK NIFTY, most other sector indices that move along with NIFTY are clear laggard. Specifically – Infra, Metals and IT indices which have connections with economic growth, have been clear laggards. The same weakness is observed in mid-cap indices. This is certainly not a healthy sign for overall market and economy.


DAILY CHART NIFTY INFRA INDEX

NIFTY INFRA Daily Price Chart

DAILY CHART NIFTY IT INDEX

NIFTY IT Daily Price Chart

Impact of Economic Data releases:


Earlier in November Moody’s downgraded India’s economic outlook. On Friday 29th November after the market closed, the GDP growth data was published which was very disappointing. Indian economy that grew at 8% just two years earlier had slowed down to below 5%. As the new month opens, this will weigh on the market sentiments.

What Next for India Markets?


As the economy is showing weakness that will eventually reflect in market movement. As the market is in uptrend that is still intact, there is no reason to take any bearish call. However a break below 11890 will be considered a structural failure and that will be considered reversal in market direction, at least in the near term.