Stock Market Outlook: Auto, private bank, FMCG sector stocks to lead bulls at Dalal Street next week

Stock Market Outlook: The much anticipated US Fed move to cut interest rates became a reality with a 25bps rate cut on 31st July. In the true market custom of 'Buy on rumour and Sell on news', markets fell! Post the rate cut, the press conference addressed by the US Fed Chairman Jerome Powell cut any chances of more such cuts. The future policy signaling was apparently more hawkish than the market was anticipating. Powell characterized the move as a “mid-cycle adjustment to policy” in contrast to “the beginning of a long cutting cycle.” On what lies at Dalal Street next week, stock market experts are of the opinion that Auto, private banks, FMCG stocks would lead the bull run as these sectors are in oversold condition and are poised for some short-covering.

Anoop Bhaskar, Head – Equity, IDFC AMC said, "The overall sentiment, on the domestic front, remained negative throughout the month on account of lower growth and subdued consumer sentiment, credit crunch due to tight liquidity conditions and rising stress especially in NBFCs and lack of any measures to boost in the short to medium term. Indian equities corrected meaningfully post the FY20 Union Budget announcement on 5th July 2019 given the uncertainty emanating from a couple of proposals. The monsoon season has been disappointing with June-July deficit at 9 per cent of Long Period Average (LPA), albeit improving from around 33 per cent deficit in end June." Bhaskar went on to add that despite the doom and gloom, the only silver lining for investors is reasonable valuations, especially for small and mid-caps. On the global front, US Fed cut rates for the first time in a decade but disappointed the street by the quantum (25bps) and relatively hawkish commentary. Global equities were buoyed by a US-China trade truce central banks continuing to shift towards a more dovish stance as economic data deteriorated.

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Speaking on the current market outlook Simi Bhaumik, a SEBI registered technical equity analyst said, "Currently, the Indian stock market is witnessing short-covering and Nifty has strong resistance at 11,250 levels while the Bank Nifty is facing resistance at 28,700 to 28,750 levels." Bhaumik said that Auto, private banks and FMCG stocks are expected to outperform other sector stocks. Asked about some specific stocks that share market investors can bet upon in coming week Simi Bhaumik said, "Britannia, Hindustan Uni Liver, Dabur and McDowell are some stocks that would give upside movement in the coming week at Dalal Street."