By Rahul shah
The equity benchmark index rose for a fifth straight day in the longest gaining streak in more than two months as the central bank surprised with a rate pause along with better-than-expected business update by corporates, FIIs turning into strong inflow in equities and strong micro data boosted market sentiment. Both Sensex and Nifty rose 1.5% each for the truncated week that concluded on Thursday. Markets in India were shut on Friday for a holiday. FIIs have turned buyers in just three trading sessions over Rs 1600 cr and reduced their F&O short positions from 92% to 83%, which indicated a short covering in the market. Last week, interest-sensitive sectors like banking, auto, NBFC and realty stocks dominated in Indian bourses on favourable impact in the RBI policy outcome. India VIX fell further to 11.8, implying a strengthening in equity. Sensex gained 841 points or 1.4% to close at 59833 and Nifty advance 239 points or 1.4% to close nearly 17600 mark or 17599. Realty Index witnessed the biggest gain and gained over 4% followed by auto, financial and Pharma stocks.
Beaten-down realty stocks witnessed fresh buying after the RBI kept the interest rates unchanged. India’s top seven property markets have witnessed the highest number of launches in over a decade and touched the number in the March quarter to its previous high recorded in 2012. Real estate developers are looking to take advantage of robust sales momentum along with the resilience exhibited by the Indian economy.
This week, investors will focus on quarterly results, Inflation data and US Fed minutes. Tech major, TCS and Infosys and banking major HDFC Bank will announce quarterly results this week. In the US, big banks including JPMorgan Chase & Co and Citigroup will be among the companies reporting quarterly results this week. From the economic data point of view, Investors will keenly watch US, China and India Inflation data which is crucial in the current rising interest rate environment. More importantly, US Fed Minutes of the meeting will be announced on Wednesday and it may give a few indications about policy-making decisions. UK would announce its Feb GDP while the last FOMC meeting minutes would provide insights into US Fed’s thought process.
In the global markets, the US market concluded its first losing week in the past four as a batch of economic data stoked concern that the US economy is headed for a recession. Data Thursday showed filings for jobless claims surpassed estimates last week, a day after a private payrolls report indicated hiring slowed more than forecast. US 10-Year and 2-year bond Yields fell to a 2-month low and US Dollar Index ended at a 4-month low below 102 which is a positive for the market. Moreover, US VIX fell to a 1-year low at 18.40 which indicates a stable US market volatility. European markets gained after better-than-expected economic data announced by UK and Germany IIP data reported spiked to a 3-year high.
Technically Nifty has formed a Bullish candle with a long lower shadow on the weekly frame which indicates buying at support zones. Now it has to hold above 17550 zones to extend the move towards 17700 and 17777 zones while on the downside supports shift higher at 17442 then 17350 marks.
ITC: Buy – CMP: Rs 387 – Target: Rs 400 – SL: Rs 380
ITC has retested the breakout of the resistance trend line and it has formed a bullish candle which indicates strength for the up move. The RSI oscillator is positively placed which will support the move towards higher levels.
NTPC: Buy – CMP: Rs 175 – Target: Rs 186 – SL: Rs 171
NTPC has retested breakout on a weekly chart and inched higher. On a daily scale, the stock is trading well above its averages which indicates that the uptrend is intact. The RSI oscillator is positively placed which will support the move towards a higher level.
(Rahul shah is Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution at Motilal Oswal Financial Services. Views expressed are author’s own.)