By Ajit Mishra
Markets ended lower amid excessive volatility last week, tracking mixed earnings and muted global cues. After the subdued start, a sharp cut in the middle derailed the momentum however resilience in the select heavyweights in the final sessions trimmed losses. Eventually, both the benchmark indices, Nifty and Sensex, lost over a percent each to close at 21,571.80 and 71,423.65 levels respectively.
On the sectoral front, banking, realty and financials were badly hit while energy and IT managed to end in the green. Interestingly, the broader indices outperformed for yet another week however deterioration in the market breadth showed selective participation.
This week is a holiday-shortened one and we expect volatility to remain high, due to the prevailing earnings season and the scheduled monthly expiry of January month derivatives contracts. On the global front, indications are mixed however strength in the US markets would continue to offer support. With the end of a month-long consolidation phase, we are eyeing 39,000 in the Dow Jones Industrial Average (DJIA) and the support has shifted to the 37,300-37,700 zone.
Considering the mixed cues, we reiterate our view to focus on stock-specific opportunities across sectors barring banking. Traders can choose selectively from the midcap & smallcap space too and be cautious in stocks that are witnessing excessive momentum.
Here are the key levels for both the Nifty and Banking index along with the list of stocks that can be considered for long and short trades.
Nifty (CMP: 21,571.80) – Nifty is likely to remain range bound with bias on the negative side until we see improvement in the banking pack. On the higher side, 21,850-22,000 would be tough to cross while the 21,000-21,200 zone will act as a cushion, in case the decline resumes.
Bank Nifty (CMP: 46,058.20) – The sharp cut in the select private banking majors like HDFC Bank, Kotak Bank and IndusInd Bank completely changed the tone of the sector. At the same time, resilience in heavyweights like ICICI Bank and Axis Bank combined with noticeable buying in the PSU pack eased some pressure. Going ahead, a decisive breakdown below 45300 could push the index further lower to the 44,500 zone. In case of an attempt for recovery, it would find resistance around 46,500 first and then major at 47,100 levels. Traders should maintain a check on leveraged trades and wait for some stability.
Stocks to Watch
Bullish- Aartiind, Apollohosp, Balkrishind, BPCL, Colpal, ICICI Bank, PFC
Bearish- Bataindia, HDFC Life, Hindunilvr, MFSL, Navinfluor, PEL, SBI Card, UPL, Zeel
(Ajit Mishra, SVP- Technical Research, Religare Broking. Views expressed are the author’s own. Please consult your financial advisor before investing.)
