The Indian Equity Markets are at an interesting level as we look forward to the last month of the Year 2020. This year has been a really testing year for both investors as well as traders all over the world. Indian equity markets have seen a big correction and an equally fast recovery in the last 7-8 months
The Indian equity markets ended the November month on a high and the outlook for December seems to be divided amongst the analyst community.
Some analyst expects the dream run of the last 6 months to continue and the markets to end the year on a high while there is another group of analysts who advises caution at this higher level of Indian equities and recommends stock-specific investments and trading only.
They expect a small correction in December month If not a big fall in Indian equity markets.
An healthy consolidation at this level is what the analyst are suggesting for the month on December and are advising to pick stocks and sectors as per the momentum during each week of the month.
The second half of the December can see some corrections since normally the FII’s are seen to be in holiday mood after 15th December onwards till the New Year and resume activity investments only around 5th of January of the New Year.
The investment flow from Fii’s may seen a slowdown after 15th December and this can lead to the nifty consolidating or losing some momentum.
FII’s have already heavily invested in November month to the tune of 55000-60000 crores which is a record for Fii’s investment in any single month till now.
The Dii’s have been selling continuously and have accounted for 25,000 crores approx selling in November month.
It has also been seen that there is a sector rotation as well as switch from large caps to mid-cap and small caps for the last few weeks and the same is expected to continue in December too.
Considering all these, all prudent investors and traders would be advised to take professional guidance at these higher levels of equity and do due diligence before allocating massive capital allocation in the coming month.
The Top most mantra for the coming month would be to have a high focus on preserving your capital first and keep booking at least part of the profits as and when opportunity arises.
It’s advisable to avoid high leveraged trades in the coming month. The experts at LakshmiShree will always available to assist you in taking your profitable investment decisions.
As far as the levels to follow in nifty are concerned , Most Analyst expect the nifty to trade in the broader range of 12400 to 13450-13550, a bigger range of 12150 to 13750 and a smaller range of 12800 to 13150-200.
The bank nifty gained in the November month and is catching up with the nifty. Bank nifty is yet to reach its high of 32000 levels and can be expected to touch it in case the nifty continues its upward trend in December.
The Loan moratorium case hearing in the Supreme Court on 2nd December would have an impact on the bank nifty. If the outcome from the Supreme Court is as expected and nothing of a surprise comes out, then bank nifty would continue its upward trend in December too.
It would also be important to keep an eye on the U.S. Markets regularly to see if any changes in trend from bullish to bearish are happening in global markets.
The positives from the U.S Markets is that the Transition of Joe Biden to become the President of the United States of America on 20th January seems to be much easier since Trump has given indications on Friday that he is willing to accept the verdict and move out of the white house.
Also, the much-awaited Stimulus expected in the U.S. will keep the global markets in the uptrend as liquidity will be a driving force in the near future for emerging markets including Indian markets.
Another positive development is the various pharma companies coming out with positive outlook as far as the Vaccine research development and its availability being possible in the coming months.
This can be a big trigger for normalizing the economic activities all over the world and economic activities rebounding to higher levels in the coming 2 quarters. This will give a big boost to companies who are already reaching their pre-covid level of economic activities as of now.
From the Indian economy perspective, The GDP numbers that came on Friday showing a contraction of 7.5% is much better than the most analyst expectation of 8 to 9 % contractions and this would give a big leg up for the economy picking up in the next 2 quarters and thereby the companies already doing good in October and November will be at a advantage and needs to be considered for investment and trading opportunities.
Some of the stocks to watch out for in the coming weeks would be Infosys, HCL Technologies from the Information Technology pack, Reliance Industries, HDFC twins –HDFC Bank and HDFC, ICICI Bank, Bajaj Twins-Bajaj Finserve and Bajaj Finance, Indusind Bank, Manapurram Finance, Shriram Transport, HDFC Standard Life, SBI Life, Mahindra and Mahindra, Maruti, Ashok Leyland, Bajaj Auto, Hero Motorcorp, Adani Ports and some of the metals sectors stocks like Tata Steel, JSW Steel, Vedanta, etc.
Good quality stocks from the PSU sector seems to be trading at a attractive valuation and can be in the limelight in the coming month as the funds allocation happens from large caps to small and midcaps.
The Pharma stocks with Vaccine related developments can be kept in the radar and entered into at lower levels for the news-related upticks in its prices. Cadila, Astra Zeneca, Dr. Reddy’s can be the favorites in the pharma sector.
To sum up, the Outlook for December is to be cautiously optimistic with focus on trading and investments to be done within strict capital allocation discipline and not to go overboard as far as your capital allocations is concerned especially since the equity markets are at the highs.
Hope this helps you in getting an overview of the markets for the coming month. Wishing you all a profitable trading and investment month.
