Next week, trade in local equities is expected to be choppy and stock-specific due to
rollover of derivative positions, as the December series will expire. During the expiry
week, market typically tends to be volatile. However, this time dealers expect
volatility to be low. The overall bias is slightly positive as indices have ended up for
the second consecutive week. But, the upside is seen capped as due to lack of any
major positive triggers and year-end holidays globally.
Yesterday, Nifty 50 and S&P BSE Sensex ended flat at 7861.05 points and 25838.71
points, respectively, due to absence of any triggers. Breakout above 8000 (on Nifty
50) would be the first confirmation of the resumption of the uptrend at least for the
medium term. The S&P BSE's Sensex closed flat at 25838.71 points. Most market
participants see indices ending 2015 on a positive note and are hoping for a better
2016.
We expect the mid-cap sector to continue to outperform large-caps in the next year,
although action may turn stock-specific, as valuations are getting expensive. The key
reason for the out-performance of mid-caps is the fact that the positive impact of
operating leverage and financial leverage has been more profound compared to large
caps.
This trend is expected to continue on the back of an incremental fall in input costs and
likely reduction in interest rates in CY16. The mid-cap space is Bajaj Finserv, Jagran
Prakashan, Jet Airways, Greaves Cotton, Ashoka Buildcon, Somany Ceramics, among
others. Among sectors, technical charts indicate banks may remain weak next week.
During the session, selling in banking stocks pulled down Nifty 50 and Sensex to the
day's low of 7835.50 points and 25763.40 points, respectively. Although Nifty Bank
had touched a high of 16939.60 points, it failed to sustain gains due to lack of followup
buying and this indicates that some selling is likely. In view of the expected
pressure in banks, traders should keep their positions light on Nifty 50.
