By Rahul shah
Equity benchmark Sensex climbed up nearly 1500 points on Friday to close at a 4-week high of nearly 59k as investors’ risk appetite improved after fears of a global banking crisis started to ease, driving domestic markets higher for a third consecutive day. FIIs have turned in favour of Indian bourses, Rupee strengthens against USD at 82 level and a rally in the global market boosted market sentiment. GST collection at 1.60 lakh crore second highest collection since the implementation of GST in 2017. India Vix slipped nearly 15% to close at below 13 level and also has a positive sentiment in the markets. There was short covering in the market ahead of quarterly results and also the FY23 year-ended expiry on index re-balancing. Heavyweight, Reliance Industries, Banks, defence, pharma, metal and IT stocks led a rally last week. Sensex soared 1464 points or 2.50% to close at 58992 and Nifty advance 415 points or 2.4% to close at 17540 against the previous week’s close. In FY23, Nifty was down by 0.6% while Sensex gained 0.7%. Among the major sectors in FY23,
Global markets recorded smart gains last week in the range of 3-5%. Both the US and European markets climbed by 3-4% on investor bets that a peak in interest rates is near and bank turmoil will ease further. The market hopes that the US Federal Reserve to ease plans for more interest rate hikes. The tech-heavy Nasdaq 100 entered a bull market, rising 20% from a December low. The S&P 500 powered back above 4,000. The Cboe Volatility index closed at its lowest in three weeks at below 20 level indicating a stable US market.
Heavyweight, Reliance Industries climbed up nearly 6% this week after the conglomerate said that it would meet on May 2, 2023, to mull the demerger of its financial services unit. Defence stocks recorded smart on account of strong government order by make in-India plan. Tech stocks witnessed fresh buying as the global IT major Index Nasdaq Composite recorded smart gains in the last few sessions. Nasdaq 100 Index soared 20% from a December low compared to flat Nifty IT Index.
This week will be important as RBI announces credit policy on Thursday. The Reserve Bank of India (RBI) is expected to raise its main interest rate by 25 basis points on 6 April, and then pause for the rest of the year. Inflation in India has been above the central bank’s upper limit of 6% for two consecutive months, and that is expected to be the main cause. However, RBI commentary will be important for the market. Ahead of short spun this week, expect the market to be range bound with positive bias as the domestic trading window will be open for three sessions only. However, the focus during the week will be shifted back to financials ahead of the RBI policy meeting. This week kicks off with manufacturing PMIs across the globe and construction spending, followed by job openings and private payroll data, and ending Friday with the pivotal labour market report.
Back home, we have seen last week Indian markets soar nearly 3% and joined hands with global markets as the global indices gained 3-5% this week. Indian equity indices Nifty closed above the psychological mark of 17300 mark. The rally was long overdue as fading worries over the recent turmoil in the US and European banking industry prompted investors to latch upon the beaten-down stocks. Falling US bond yields and the return of FIIs into the local markets in recent sessions have bolstered the market sentiment. US Dollar Index fell to a 3-month low at 102 level.
In the near term, we expect, the market to strongly bounce back due to a favourable risk-reward ratio. IT, realty, small-cap, metal, and energy index declined 10-20% in FY23. The hope of FIIs will be back in Indian bourses due to attractive valuation, strong domestic macro and hope of good quarterly results. India, Q4 results will be announced next couple of weeks. IT stocks will be focused on due to the biggest fall in FY23. Auto stocks are expected to bounce back as auto players hike prices from 1st April. Sugar stocks will be focused on blended ethanol from 10% to 20% implemented from 1st April. Defence stocks will be positive due to the large government order on the make-in-India plan.
Technically Nifty has also negated the formation of lower highs on the weekly scale after three weeks. Now it has to hold above 17250 zones to extend the momentum towards 17442 and then 17550 zones while on the downside supports shift higher at 17250 then 17171 marks
Siemens: Buy – CMP: Rs 3325 – Target: Rs 3500 – SL: Rs 3280
Siemens is respecting the 20-day average and it has formed a bullish candle on the daily scale which indicates strong momentum. • RSI on the daily and weekly scale is placed in the positive zone which will support higher prices.
HDFC Bank: Buy – CMP: Rs 1609 – Target: Rs 1680 – SL: Rs 1580
HDFC Bank is forming a higher high since the last 3 sessions and finding stability at support zones. It has formed a bullish candle on the daily scale which indicates strength in the counter. • RSI on the daily and weekly scale is placed in the positive zone which will support higher price.
(Rahul shah is Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution at Motilal Oswal Financial Services. Views expressed are author’s own.)