Nifty close below 18700 to trigger a sell-off; outright collapse unlikely By Anand James Last week, Nifty not only pushed beyond the record peak that had eluded it for more than year, but also stayed above the same for most part of the week, with low VIX, suggesting how comfortable traders are at these levels. Our contention, while expecting a breach of this level last week, was that a powerful upsides may not follow such a break. And it appears, small and mid caps echoes this sentiment, as only 6% and 3% of mid and small-caps respectively are near 52 week highs. But this is not to say that they have not moved at all in the last week, as 28% of the mid caps and 14% of the small caps closed near the week’s high on Friday, as opposed to 16% for the NSE 500 stocks. Also read: Rupee likely to appreciate amid weak dollar, positive equity markets; USDINR pair to trade in this range This assumes significance as Friday’s down close in Nifty resembles an evening star candlestick pattern, raising concerns of a potential correction next week. With such concerns in perspective, we would remain positive on consumer durables and realty, while staying away from power. Nifty on the other may be assumed to have topped out at 18900, if it is unable to close back above 18700, or on direct fall below 18600 on Monday. While an outright collapse is less expected, inability to close back above 18700 on Monday will delay the achievement of 19400 next week, and we could instead be looking at 18380. (Anand James, Chief Market Strategist, Geojit Financial Services. Views are author’s own.)
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Retail inflation in milk was reported at 8.85% in May 2023. The milk inflation has remained elevated at over 6% since August 2022. Despite India being the largest milk producer since 1998, the commodity has been the second biggest factor after cereals such as rice and wheat in driving up retail inflation in the last fiscal.
Milk has the second highest weight in the food and beverages basket of the consumer price index at 6.61%, a notch lower than cereals and products with a 9.67% weight. Organised players, including Mother Dairy and Amul, hiked prices multiple times in the last one year citing higher fodder cost, robust demand and some impact due to reports of lumpy skin disease.
Industry sources said feed cost, which has a share of more than 65% in the cost of production of milk, has increased to Rs 20/kg from Rs 8 a year ago. The finance ministry in April had attributed the elevated milk inflation to a demand supply mismatch and said it could be one of the factors apart from volatile international crude oil prices and constrained supplies of milk would influence the country’s inflation trajectory.
“Milk production has been impacted by a lumpy skin disease infecting millions of cattle in late 2022,” the ministry said in the monthly economic review, adding that the vaccination drive against the disease is expected to curb the spread and immune the cattle against the skin disease.
According to official data, currently India is the world’s largest milk producer, and has a share of 23% in global milk production. For the first time in decades, the country’s milk production is likely to have stagnated in 2022-23 due to Lumpy Skin Disease in cattle across several states and the lagged effect of Covid-19 in the form of stunting of the animals, a senior official with department of animal husbandry and dairying recently had stated. The milk production was estimated at 221 million tonne in 2021-22.