By Rahul Shah
Bearish global sentiments along with renewed fears of Covid-19 triggered sharp selloff across Indian bourses this week. While the Sensex cracked nearly 1500 points (2.4%) to close below 60,000 levels at 59845, the Nifty packed index crashed over 462 points or 2.5% to close below 17,900 levels at 17807. Broader markets, too, bore the brunt of the intense selloff and underperformed benchmark indices. India Vix soared 16% to close above 16 against the previous week close. There was panic selling by the retail players on fears of rising Covid cases in the world’s second-biggest economy China which has spooked investor sentiments.
The resurgence of Covid-19 cases coupled with fears of persistent hawkish stance by the US Fed along with other global central bankers have a negative impact in the market. Moreover, the ultra-hawkish stance of the Bank of Japan and the increased yield curve to 0.50% from 0.25% also had a negative impact on the market. PSU Banking stocks were the biggest losers today due to profit booking after gaining over 40% in the last few sessions. Slowdown in global demand pulled down metal and IT stocks.
Hotel, airline, QSR stocks, entertainment stocks declined sharply in the last three trading session amid fears of COVID cases after China and along with few Asian counters reported soaring covid cases. Expectation that the government stepped up measures to curb a fresh wave of infections as large gatherings are expected during Christmas and new year celebrations.
Data showed that the over $1bn net buyers (Rs 8545 cr) by the domestic institutions while FIIs were net sellers merely Rs 900 cr. It may be some margin call pressure or traders keeping away after facing pain during previous pandemic times. However, it is realty that the Indian immunity and healthcare systems are much better than the global peers and is far away from any impact in the further pandemic cases. Expects good buying opportunity after stiff correction in the market as mid-cap and small cap stocks (PSU Banks, airlines, entailment, hotels) fell nearly 20-25% from the recent high.
This week expectation of range bound movement but probably domestic market likely to bounce back after a fall of 3% in index this week; largely due to absence of global events next week (No news is good news) ahead of Christmas Holiday in US and European countries (Monday closed). Hope of short covering likely in the expiry of December series. Nifty has formed a Bearish candle on daily scale and has been making lower lows from the last seven sessions. Now, till it holds below 17950 zones, weakness may be seen towards 17650 and 17500 zones whereas hurdles are placed at 17950 and 18081 zones.
Stocks to buy
Jubilant FoodWorks
CMP: Rs 511 | SL: Rs 495 | Target: Rs 550
Jublfood has taken support near its crucial demand zone of 500 levels and inched higher. It has given falling supply trendline breakout on daily scale and supports are gradually shifting higher. RSI on the daily chart is bouncing from deep oversold territory and forming postive divergence. Considering the current chart structure, we advise traders to buy the stock for an up move towards 550 with stop loss of 495.
Cipla
CMP: Rs 1119 | SL: Rs 1100 | Target: Rs 1185
Cipla
(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)