By Rahul Shah
Equity benchmark Sensex managed to end in positive territory to close above 61k against the previous week led by IT stocks amid buying interest by FIIs as well as domestic funds. Sensex advance 320 points or 0.5% to close at 61,003 while Nifty gained 88 points or 0.5% to end below 18k or 17944 against the previous week’s close. FIIs were net buyers the previous week over Rs 4000 crore while DIIs were net buyers worth Rs 2735 crore. Moreover, strong WPI data, stable oil prices and good quarterly results lifted the domestic market.
– IT stocks were major gainers this week and the Nifty IT index advance 1% this week. Two years year high US retail sales and impressive quarterly results. Impressive quarterly results lifted IT stocks. Market expectation improved offshore demand after reported strong US retail sales.
– Banking stocks declined this week as the concern of rising interest rates after January CPI data spiked to 6.4%, much higher than the RBI projection. Expectations that the RBI may further hike interest rates in the next policy meeting
This week will be important as FOMC minutes of the meeting will be announced on Thursday which may give some light on the future course of the rate hike path. Moreover, the US and European countries PMI data is to be announced next week. Global markets ended weekly loss after a slew of data and comments from Federal Reserve officials which led to expectations for steeper interest-rate hikes.
– Two hotter-than-expected US inflation prints this week dampened hopes that price pressures were beginning to ease. Meanwhile, two of the Fed’s most hawkish policymakers signalled they may favour bigger interest-rate hikes. Treasury yields spiked along with US Dollar Index to a 2-month high after data showed US producer prices rebounded in January by more than expected, tight in the labour market and 2-year high retail sales data. Hot wholesale price inflation and hawkish comments from US Federal Reserve officials is a big question mark that whether the US Fed hike interest rate by 25bps or 50bps to cool down inflation.
– In the domestic market, expect the market to be range bound as there are no events to be announced next week after the quarterly results ended. The market will be looking at the valuation front and news-specific stock action to be seen. Global markets trend and FIIs activities will determine the domestic equity market. Positive factors include oil price fall to 1-month low, impressive quarterly results and FIIs being net buyers over Rs 4000 crore this week. Moreover, Indian markets have not yet participated in the rally in the last couple of months. US Dow Jones gained 2%, S&P 500 soared 6% and Nasdaq Compote surged 13% on a YTD basis. European markets climbed up 8-12% on YTD (Year to Date). Most of the Asian markets soared 5-10% on a YTD basis but Nifty slipped by 1% on Year to date (YTD). It is expected that the Indian market is looking attractive and provides buying opportunities on any sharp decline.
Apollo Tyre: CMP Rs 331 – SL Rs 323 – Target Rs 350
Apollo Tyres has given Inside Bar breakout on the daily chart and surpassed its falling supply trend line. It is respecting its key moving averages and supports are gradually shifting higher. RSI on the daily, weekly and monthly scale is placed in the positive zone which indicates strength in the counter. Considering the current chart structure, we advise traders to buy the stock for an up move towards Rs 350 with a stop loss of Rs 323.
Bajaj Finance: CMP Rs 6416 – SL Rs 6330 – Target Rs 6800
Bajaj Finance has retested the breakout of the falling channel on the daily scale and it has formed a bullish candle which indicates a positive setup. On the weekly scale, the stock is forming a higher high since the last 2 weeks indicating that the trend is up. RSI on the daily and weekly scale are placed in the positive zone which indicates strength in the counter. Considering the current chart structure, we advise traders to buy the stock for an up move towards Rs 6800 with a stop loss of Rs 6330.
(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. The views expressed are the author’s own. Please consult your financial advisor before investing.)