Inflation peaking, base formation seen in stock markets

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By S Jha

New Delhi, November 14: The stock markets on Monday remained flat after a strong Friday rally on the back of the foreign institutional investors pumping over Rs 4,000 crores. The FIIs again brought over Rs 1000 crore to the equity market, while their domestic counterparts too bought into the bourses marginally.

The Dow Jones was also trading flat to positive late Monday afternoon. While the US equity market had sent the Indian bourses on Friday flying on the basis of the inflation numbers, which suggested peaking. On Monday, the inflation in India too suggested aligned with the peaking in the US, as the retail inflation eased to 6.77 per cent in October. The lower inflation number of attributable to the high base effect along with the cooling of the food and the metal prices, which should be the positive cues for the equity markets in the next few days.

The market depth favoured advances. On Monday close, nearly two-third of the scrips in the indices were above their crucial technical levels, which acts as cues for the traders that the market could be setting up for further positive momentum if there are no negative surprises. Both Sensex and Nifty are trading above the 52 weeks high, which again is an indicator of technical breakouts in the language of the chartists.

Hospital scrips were trending on Monday following a clear trend in the sector that they have largely reported better than expected quarterly numbers. Apollo Hospital, Fortis Hospital, Krishna Institute were among the scrips which trended strongly on Monday.

However, there appears a sectoral rotation, as pharma scrips which were trending higher appear to have given the space for the IT stocks to make a comeback. The likes of Info Edge (Naukari), Mind Tree, Persistent Systems, Tech Mahindra traded strong on the bourses on the Monday.

Metal index was also firm, with Hindalco leading the rally with over six per cent gains, while the steel scrips also remained firm. The HDFC twins showed no signs up giving up on their strength, as they resumed their strong trading after an early profit booking after the favourable weightage rejig brightened the prospects of the FIIs further buying into them.

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