MUMBAI, India – Despite the overall optimism on Wall Street this week, a correction is likely in the market.
During the week, the domestic equity market rose higher due to positive sentiments of investors, which was powered by various factors, including steadily quiet geopolitical situations and positive earning numbers of large corporations. Through the week, the stock market largely ignored the negative headlines, which significantly means market bulls are taking in the reins again.
However, the open interest levels and market breadth are not as supportive about this week’s optimism, something that could affect the current levels in the market, signaling that a correcting might be probably in the market despite the positive end this week.
The rosy optimism and gains in the market are not entirely perceptible at the ground level. But despite that, consumer inflation is set for a monthly high. One the other hand, the GDP growth is predicted to go under the 5% point. This kind of inequality in the market sentiments and the overall economic factors usually leads to a drawn-out rectification in the stock market.
For one, the major jolt in the telecom industry was the raising doubts about companies being able to continue after the Supreme court verdict, which directed them to pay off over billions of rupees to the government for pending dues. The issue has been largely gone unnoticed by the market.
One the other hand, the long-standing insolvency case of Essar Steel got its closure on Friday. The ruling has given the committee of creditors the discretion when it comes to the distribution of funds. It is expected to have a positive impact on the overall economy as well as limiting the burden of capital infusion on the government.
On the technical outlook, the Nifty 50 is going between sideways to a narrow range, strengthening the gains it made since September. Stock prices are expected to stay volatile but are predicted to close in a narrow range.
The earnings season is nearly over, and the market is taking cues mostly from international factors like the Sino-US trade deal. Without any positive triggers, the market might continue being rangebound and dull. Movements on specific stocks are expected to prevail compared to changes in the broader market. Investors are more likely to have to wait patiently for the correction in the stock market to unfold, which is expected to take some time. It was best stated by Warren Buffet when he stated that the stock market is a money-transferring system from the impatient to the patient investor.