Indian Markets Update – 3rd Oct 2019

TL;DR Summary: The day started after a mid-week holiday with global indices being down big after disappointing US manufacturing data. But, eventually, Indian markets did not fall as much as the world, with the post tax-cuts positivity still being intact in quality companies, in spite of too many floating negative news in banking & NBFC sectors.


Nifty 50:

Tuesday’s freak low held strong today, as did the Close of 20 Sep (tax cuts announcement day). The chart shows a pretty decent consolidation flag on a high pole, which is extremely positive and shows that the markets are not breaking down in spite of negative news all around.

NSE Mid Cap 100:

The Mid cap index is a different story however. The flag is steeper here than the Nifty (So, cannot really call it a flag). Sort of like a free fall rather than a consolidation with the present level quite near pre-tax cuts level. This is understandable, because there is a lot of weightage to the so called non – quality stocks in this index and also because a lot companies in this broad based index will not get any tax advantage because of already lower than highest tax rates (because of various existing exemptions).

Having said that, it has to be noted that good quality mid-caps with earnings tailwinds haven’t fallen as much as the index and are still above the tax-cut day close (20th Sep 2019) by a fair margin.

Interesting Stocks to watch:

Muthoot Finance:

It had a decent breakout last week over the sideways consolidation base building and has come back near that level on low volumes.

Naukri (Infoedge):

Crossed the downward resistance line with decent volumes today. Controversies around Zomato (a group company) also seem to have died down, along with net addition to ‘Gold’ restaurants in spite of the ‘log-out’ campaign.

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