By Rahul Shah
Equity benchmark Index completed their biggest weekly decline since November, as concerns about policy moves by U.S. Federal Reserve, a spike in US Bond Yield and a rally in crude oil prices dented investors’ appetite for riskier emerging-market assets. Moreover, continued FII selling and mixed bag on corporate earnings dampened the market sentiment. Sensex dropped 2186 points or 3.6% to close at 59,037 against the previous week while Nifty also fell 639 points or 3.5% to close at 17617. Global markets declined sharply – Nasdaq shed over 7% while UK, Germany, Japan, Australia Index fell 3-5%.
Back home, Technology stocks were hammered for four consecutive sessions, with the sector gauge ending with the worst weekly performance since April 2020. IT Index nosedived over 7% followed by Nifty NBFC, Bank Nifty, realty, metal, FMCG, mid-cap, small-cap and pharma Index shed 2-5%. However, the energy index advanced 1% on account of Brent crude surging to a 7-year high at $90/bbl. Auto Index managed to end flat led by four-wheeler major Maruti (to consider stock split on Monday board meeting) and Bajaj Auto (good quarterly results). FIIs were net sellers to the tune of nearly Rs 3000 cr over just five trading sessions which is a major concern in the market.
This week will be important in Dalal Street, Both the US Fed meeting and the January series F&O expiry will be held on Thursday. Moreover, Union Budget will be announced on February 1 and the market is expecting a pre-budget rally. On the other hand, the US Fed is scheduled to meet on Thursday amid intensifying concerns about accelerating inflation that has spurred a debate on how many times the central bank will raise the benchmark lending rate in 2022. Traders are also keeping a nervous eye on Ukraine, where Russia’s troop build-up is fanning fears of Moscow’s plan of an invasion. Traders will keep watch on US Bond movement, FIIs activities and Oil prices. It is expected that the market may not majorly react on the global parameters ahead of the January series F&O expiry this week and Union Budget next week. Expect short covering in the market. Expect some buying interest ahead of Union Budget. The expectation is that the government may announce increased allocation towards fertilizer and Agri sectors ahead of two Agri based state assembly elections – UP and Punjab. The government may increase Defense budget allocation (current geopolitical factors and make in India policy). Tech stocks are looking attractive after 8-15% correction also Financials which has corrected looks attractive from current prices, derivatives data suggest till nifty remains below 17850 zones weakness should be seen towards 17600 and 17500 whereas the hurdles Going forward Nifty should move and hold above 17777 then we can see the relief rally to 18000.
State Bank of India
TARGET: Rs 540 | SL: Rs 488
SBI has taken support near the 500 levels mark which is the 23.6% retracement of the recent rise. It has formed a bullish engulfing pattern on the daily scale indicating the strength in the counter. RSI oscillator is also positively placed on the daily scale and a weekly scale . considering the current chart structure , we advise traders to buy the stock for up move towards 540 with a stop loss of 488.
TARGET: 235 | SL 206
PowerGrid has given a strong breakout of the consolidation of last 34 trading session. It has formed a bullish candle on the daily scale indicating strength in the counter. RSIoscilator is also positively placed on the daily and weekly scale . considering the current chart structure, we advise traders to buy the stock for a up move towards 235 with a stoploss of 206.
(Rahul Shah is a Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution at Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)