By Rahul Shah
Equity benchmark Sensex fell over 100 points on a range-bound trade amid sentiment dampening on account of weak global market. However, Nifty ended flat against the previous week close. There was stock-specific action in the market. Nifty metal Index were biggest loser this week on account of poor quarterly results and fall in base metal price on LME. Lack of FIIs participation and absence of any fresh trigger led domestic bourses to move in a narrow range in the last few days. FIIs were net sellers Rs3202cr while DIIs were net buyers Rs2288cr this week. Sensex fell 169 points or 0.30% to settle at 60,683 and Nifty declined 11 points or 0.10% to end at 17,856.
This week, RBI hiked repo rate by 25 basis points to 6.5%. The RBI has increased repo rate by a cumulative 250 basis points since May last year. The RBI governor noted that the world economy is not looking so grim anymore and that inflation also appears to be coming down. The RBI also projected India’s GDP growth at 6.4% for 2023-24. The Central bank has projected retail inflation at 6.5% for 2022-23 and 5.3% for the next fiscal.
Global market will keenly await key inflation data to be released by India, US, UK and France next week which may provide some direction to the market. US CPI inflation data to be announced on Tuesday (expectation of 6.2% vs 6.5% previous month), and India will announce on Monday (expectation of 6.05% vs 5.72% last month). Moreover, IIP, US Job data, and Retail sales data will be announced next week. On the global from, US, Asia and European markets declined this week. Upbeat in US consumer sentiment data boosted bets that a strong economy will make the Federal Reserve to keep tightening its policy to fight inflation. US consumer sentiment climbed to a more than one-year high in early February. Global investors are starting to price in the prospect of higher interest rates, following a strong jobs report last week and a string of hawkish comments by Fed officials.
Investors are ramping up bets that we could see a whole lot more Fed tightening, but overnight index swaps are still pricing in easing by the end of the year. If inflation ends up being hotter-than-expected, the Fed will most likely go back to the hawkish playbook. The US labor market remains “extraordinarily strong” and Friday’s monster jobs report underscored that the central bank has more work to do to bring down inflation, Federal Reserve Chairman Jerome Powell said Tuesday. US Dollar Index and Bond yield surged to 1-month high which indicated a cautious approach ahead of US Inflation data.
On the domestic front, lower than expected December IIP data, concerns of higher core inflation, and RBI partially hawkish stance in its monitory policy meeting is a concern in the market. However, expectation that the RBI to unchange interest rate hike in the next policy meeting will depend upon on Monday’s inflation print. So, market will keenly watch for key CPI inflation data to be announced on Monday.
Gradual reduction in FIIs selling in Indian bourses over last few days and yesterday FIIs being net buyers after 13 consecutive days of selling which is a positive sign in the market. Technically, Nifty index has been trading in a narrow range but it is trading with a positive bias. Major support is placed at 17777-17650. Resistance on the higher side can be seen at 18018-18081.
Stocks to buy
Asian Paints: BuyCMP: Rs 2,800 | SL: Rs 2,750 | Target: Rs 2.950
Asian paints has formed base around 2700 zones and inched higher. It has negated lower highs-lower lows after five weeks and also formed a strong bullish candle on daily chart. RSI has given a positive divergence against price which has bullish implications. Considering the current chart structure, we advise traders to buy the stock for an up move towards Rs 2950 with stop loss of Rs 2750.
Havells: BuyCMP: Rs 1,200 | SL: Rs 1,175 | Target: Rs 1,300
Havells has given symmetrical triangle breakout on daily scale and holding well above the same. It has also managed to surpass and close above its crucial 100DEMA which has bullish implications. It has formed a strong bullish candle on daily chart and supports are gradually shifting higher. RSI on the daily and weekly scale is in the bullish zone which will take the prices higher. Considering the current chart structure, we advise traders to buy the stock for an up move towards Rs 1300 with stop loss of Rs 1175.
(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution at Motilal Oswal Financial Services. The views expressed are author’s own.)