WEEKLY TRENDSETTER (MARCH 19TH ,2021)
| 2021 | March12th | March19th | Ch % |
| NIFTY | 15031 | 14744 | -1.91 |
| BANK NIFTY | 35497 | 34161 | -3.76 |
| USD/INR | 72.71 | 72.47 | -1.13 |
The week saw some critical levels getting breached on the downside and the weekly expiry on Thursday saw a savage correction followed up by the early part of Friday ‘s session. What followed was a technical analyst ‘s delight! The market bounced back from exactly the same levels as in previous cases and closed in the positive! However, on an overall weekly basis the cut was almost 2%.
POINT OF VIEW
COMMODITY PRICE JUMP BIG CONCERN FOR ECONOMIC TURNAROUND
While the rising bond yields are being debated as a threat to equity markets, our domestic economy is being challenged by commodity prices which have literally gone through the roof in the past one year. This comes at a time when the two backbones of the economy -auto and infrastructure are trying to recover from a prolonged slowdown. The latter in particular has seen stagnation in fresh projects and delays and cost runs in several others. The run up in prices are as follows: –
Iron ore and crude top the charts with 90% rise which is alarming to say the least. The rise has already been voiced at ministerial and industrialists’ level and this cost push inflation is unlikely to recede if the expected revival takes place. Following this are prices of copper (+48%), aluminium (+23%), zinc (+30%) which again are catering to core industries like power, capital goods, auto, consumer durables, etc.
Several factors have been cited for the above like demand revival in China, renewable energy push, supply disruptions, etc but the concerns remain.
In the context of the rising commodity prices, hardening of bond yields could fuel more inflation and from indications available, the interest rate cycle world over appears to have bottomed out.
IMPACT OF BREXIT ON U.K. ECONOMY
An interesting article caught the eye and would like to share with readers. From data available Brexit has disrupted UK trade with EU. Exports to the EU accounts for 40% of the total exports. However, this has shown a 40% decline in January compared to Dec. While this could be dismissed as a short-term blip, the British Chamber of Commerce suggested that the problems are more than short term in nature. While the businesses are still adjusting to the new trading relationship, it will be interesting to see how this trend takes shape in the long run.
3.Last week it was suggested that positions could be lightened at higher levels. Level of 14400 on the Nifty was expected a couple of weeks back and that got achieved last week. While it cannot be extrapolated to fresh highs as of now, the levels of 15000-15100 could again be seen. Profit -taking could be considered at those levels
Wishing all readers, a great trading week! Great opportunities are emerging outside the large cap space! Trade light and look out for bargain counters!
Krish Subramanyam