Markets May See Some Revival In Coming Week

Even as there is a significant amount of gloom in the Indian stock markets,  the "hammer pattern" formed in the NIfty index has revived hopes of indications that a reversal may be on the way. Market experts feel that any measures by the government in coming days would bring a lot of improvement in sentiments and it may not be the time to go on a selling spree.

On the other hand, Morgan Stanley has lowered its target for the Sensex to 40,000 by June next year down from 45,000. This comes after Nomura lowered its March 2020 Nifty target to 11,880 from 12,990, and Citi cut its Sensex target to 39,000 from 39,600.

However, Mustafa Nadeem, CEO, Epic Research, said that Nifty forming a "hammer pattern" indicates a reversal is on the way. 

"Amid its prolonged consolidation within a range of 10800 - 11000 for a third consecutive week, a hammer pattern signifies or gives a caution for an upcoming reversal, especially, when formed on a weekly scale," he said. 

He added that global markets have seen a rebound as China and the US agreed to resume trade talks in October and this was one of the main factors that led to a sharp recovery in crucial indices such as S&P,  DJIA, and HSI. 

On the domestic front, markets have been sustaining lower levels and the markets are expecting any move that can actually address the concerns in the automotive industry and real estate space.

"Any measures would bring a lot of improvement in sentiments. The volatility we have seen which was up in the previous week cooling off, while, studying options data suggest we may be in a range of 10,800 - 11,100. Any close above 11,100 would call in the buying in broader space that can push Nifty to 11,400 - 11,450," Nadeem said. 

Markets will be critically looking at industrial production data and manufacturing production number, followed by inflation data which would set some tone. Nadeem says that any number above expectation should be good for investors. 

"At this point in time, selling should be avoided while one should look for a directional breakout from this range."

Meanwhile, according to Morgan Stanley, earnings growth in India is likely to be better in the coming two years than in the previous few years, but the pace is likely to be lower than its earlier forecast.