By Rahul Shah
Benchmarks of equity index edged lower in the holiday curtailed week which ended on April 13. The Sensex and Nifty fell nearly 2 per cent each in the three-day trading week with both the benchmarks declining in all the three sessions and ended 58339 and 17476 respectively. Auto, banking, tech stocks witnessed profit booking. However, there was stock specific action during the week. Mid-cap, small cap, cement and hotel stocks were in limelight this week. Rising oil price, geo-political tension between Russia-Ukraine, US Fed likely to aggressively hike interest rate had a negative impact on the market.
In the local market, concern about March CPI number which surged to 17-month high at 6.95% and 3-year high 10-Year G-Sec yield at 7.2% dampened the market sentiment. There is expectation that the RBI may hike interest rate in the next policy meeting. FIIs were net sellers over Rs 6000 crore during the week. Tech major, TCS announced good quarterly results but Infosys reported poor Q4 results.
The impact of high commodity prices have started showing up in CPI inflation prints and forced RBI’s hand to reduce accommodation and open up a path for higher rates starting from Jun. Tighter financial conditions are unfavorable for valuations of mid & small caps and the outlook favors defensive posturing for portfolios. Profit-booking expected in the market after retail inflation soared to a 17-month high in March, much above the RBI’s upper tolerance band. The investors weighed inflation risks against the start of the Q4 earnings season and remained cautious. The hardening of interest rates in the US and tapering of bond purchases along with the Russian invasion of Ukraine may have impacted emerging markets like India, which is hugely import-dependent on oil. Brent Crude spiked to above $110/bbl from recent low of below $100/bbl. In the macro front, strong exports growth and record high GST collection indicated that the Indian economy are booming. Most of the sectors like Auto, industrial production, entertainment, hotel, travel & tourism and manufacturing segment growth is back to the pre-covid levels. Any sharp downside will be good opportunity to buy in the Indian equity.
Expects stock specific action in the market – traders focus on hotel, metal, defense, chemical, cement and entertainment stocks. Nifty has formed a Bearish candle on daily and weekly scale and given a lowest daily close in last eight trading sessions. Now till it remains below 17650 zones, weakness could be seen towards 17350 and 17200 zones, whereas hurdle exists at 17650 and 17777 zones.
Target: Rs 800 | Stop loss: Rs 720
Bharti Airtel has given a strong breakout of the consolidation of the last 6 months near 730 zone on the monthly charts It has formed a bullish candle on the monthly scale indicating buying interest RSI oscillator is positively placed on weekly and monthly scale and showing relative strength in the counter Considering current chart structure, we advise traders to buy the stock for an up move towards 810 with stop-loss of 720
Target: Rs 495 | Stop loss: Rs 466
Chambal Fertilizers has given consolidation breakout on daily scale and holding well above the same. It is forming higher highs- higher lows on weekly scale and supports are gradually shifting higher. RSI oscillator is also positively placed on the daily and weekly scale. Considering the current chart structure, we advise traders to buy the stock on small dip for an up move towards 495 with a stop loss of 466.
(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)