Comments on the Market by Mr. Kiran Kumar Kavikondala, Director & CEO, WealthRays Securities

Bloodbath on D-Street; Global selloff continues, services PMI weakens

“Indian equity markets witnessed sharp selling today with benchmark index Nifty falling close to 3%. . Nifty saw a gap down open as Asian markets traded under pressure in morning. Sharp sell off on Wall Street yesterday was seen plaguing Asian markets and European markets. The selloff in energy stocks continued as global oil prices fell near $50. Euro zone also posted weal PMI data suggesting slowdown in economy, also disinflationary pressure and showdown in growth as suggested by oil prices weighed on the index. Rupee hovered in a narrow range as USD took a breather against global currencies. Indian services PMI for month of December came at 51.1 further weighing on the index. Metal stocks were down on fears of China slowdown. Investors exited defensives also in weak markets, India VIX rose 23% suggesting growing fear in market. Banking saw sell off ahead of the FOMC minutes. US FOMC minutes are expected tomorrow which will provide cues on Fed’s view of US monetary policy normalization. ”, Mr. Kiran Kumar Kavikondala said.

Indian Markets

Indian equity markets witnessed sharp selling today with benchmark index Nifty falling close to 3%. . Nifty saw a gap down open as Asian markets traded under pressure in morning.  Sharp sell off on Wall Street yesterday was seen plaguing Asian markets and European markets. The selloff in energy stocks continued as global oil prices fell near $50. Euro zone also posted weal PMI data suggesting slowdown in economy, also disinflationary pressure and showdown in growth as suggested by oil prices weighed on the index. Rupee hovered in a narrow range as USD took a breather against global currencies. Indian services PMI for month of December came at 51.1 further weighing on the index. Metal stocks were down on fears of China slowdown. Investors exited defensives also in weak markets, India VIX rose 23% suggesting growing fear in market. Banking saw sell off ahead of the FOMC minutes. US FOMC minutes are expected tomorrow which will provide cues on Fed’s view of US monetary policy normalization.

Other Asian Markets

Asian markets closed with a negative momentum today taking weak cues from Wall Street. Strength in Yen during morning session weighed on Nikkei. Slowdown fears in China added to volatility with SSE also witnessing sharp selloff. Investors were seen moving to safe assets such as bond and precious metals.

Commodity Outlook:

Commodity Market was very volatile in the morning session; Gold and Silver Prices surged in the morning session as Equity Markets routed due to the dip in Oil Prices; Crude Oil Prices continued to hit new lows in the morning session on supply glut while Natural Gas Prices also dipped despite cold weather outlook in USA; Base Metals were also weak in the morning session as routing Equity Markets put pressure on their prices.

Evening outlook:

Gold and Silver could continue to be strong in Evening session; Crude Oil and Natural Gas are expected to remain weak while Base Metals could also be under pressure in the evening session.

Stock Recommendations:

NTPC - Sell at Rs. 139.20(CMP); Target -Rs. 137.50; Stop Loss –Rs. 140.50

SSLT - Sell at Rs. 209.05(CMP); Target -Rs. 206.50; Stop Loss –Rs. 211.50

Tech Mahindra - Sell at Rs. 2536.25(CMP); Target -Rs. 2510.00; Stop Loss –Rs. 2562.00

Sectors Snapshot

Bank Nifty: Banks saw sharp sell off today on back of various factors. US FOMC minutes to be released tomorrow made investors cautious and triggered a sell off while prospects of a global economic slowdown also kept banks under pressure. Rupee remained at elevated levels further triggering the worry in markets.

CNX IT: Major IT stock saw sell off as weak close on global tech stocks weighed. Also, weak Euro zone PMI data further impacted export oriented IT cos. India’s HSBC services PMI came at 51.1 for December further weakening the sentiment. Also, Q3 results of Infosys expected on Friday was eyed.

CNX Energy: Energy Sector lost over 350 points in the session today as crude oil prices fell to multi year lows; All stocks in the sector lost over a percent while ONGC was the biggest loser in the sector losing around 6%.

CNX Pharma: Index opened weaker today after global sell off was seen due to fall in crude oil prices. All the sectors were seen taking hit. Index fell over 2% dragged by all the major companies. However, Glaxosmithkline bucked the trend and managed to close in green. Divi's Lab was the top loser among the index.

Market Movers

Gainers

HUL: Shares of the bucked the trend today after Deutsche Bank upgraded the stock to 'buy' from 'hold' and increased the target to Rs. 900.

Losers

JSPL: Shares fell after global sell off and profit taking was seen after rise in previous session was seen after report on approval of mining ordinance.

ONGC: Energy space took a beating after crude oil slipped below $50 a barrel. ONGC was the major loser among the index.

SSLT: Metal space was the major loser among the indices in today's session. SSLT continued to slip for two consecutive session tracking weakness in base metals.

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