Street signs: 16,000 key support for Nifty, FPI sell-off continues & more

16,000 key support for Nifty

The Nifty50 Index consolidated within a broad range of 15,900–16,400 last week. It recovered from the lows on the day of expiry to keep the momentum in the last trading session to end above 16,350, with gains of over half a per cent. “At the current levels, 16,000 has once again become a support zone. Until we manage to sustain above it, traders should use declines to add longs in the market. On the higher side, 16,400-16,500 remains a sturdy hurdle. Surpassing it will open the door to 16,800, followed by the 17,000 zone," said a note by Angel One.

FPI sell-off continues in May

Foreign portfolio investors (FPIs) have continued to offload Indian shares this month, selling stocks worth over Rs 39,000 crore. This has taken their year-to-date selling to Rs 1.66 trillion. “Relatively high valuations in India, rising bond yields in the US, an appreciating dollar, and concerns regarding the possibility of a recession in the US - triggered by aggressive tightening - are factors behind FPI pull-out. There are signs of selling exhaustion, but FPIs may continue to sell at higher levels," said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

Passive ELSS funds opportunity for new mutual funds

The Securities and Exchange Board of India recently announced steps to improve development of passive funds in India. The markets regulator also allowed fund houses to launch passively managed equity-linked savings schemes (ELSS), albeit with a caveat that mutual funds launch passive/active funds in the ELSS category. Since a large number of existing fund houses already have their ELSS schemes, this move will give new players an opportunity to enter the asset management industry. Passive ELSS funds will be a cost-effective tax-saving alternative for retail investors in India.

Compiled by Ashley Coutinho & Chirag Madia