By Rahul Shah
Equity benchmark Index advanced 1% to settle at record highs, helped by intense buying in IT, metal and auto. Sensex closed with gains of 630 points to settle at all-time high of 62,294 and Nifty jumped 205 points to close at 18,513, just less than 100 points away from its all time high of 18604. There was positive sentiment in the market after the US Fed toned down on aggressive hike interest rates. US and European markets closed 3-month to 6-month high after post release of the US Fed’s November’22 meeting minutes. PSU Banks continued north-bound journey in the last few months after improved quarterly results and asset quality. Moreover, Government raised maximum tenure of PSU banks’ CEO to 10 years from 5 years. PSU Bank Index climbed up by 5% against the previous week close and spurted by 60% on Ytd basis.
After a long time, IT stocks witnessed fresh buying and Nifty IT Index gained 2% last week. Mid-cap and small cap stocks witnessed smart rally. This was one of the best weeks in the global market history as across global markets, from US to Europe closed at a 4 to 8-month high (Dow close 8-month high) following the encouraging US Fed minutes outcome. Key benchmark equity indices climbed to a new peak. Nifty hit a record closing high of 18,513, Sensex hit life-time high of 62,294, while Nifty Bank climbed to a new peak of 43,339. Sentiment were boosted after most of the US Fed officials backed the decision of slowing the pace of interest-rate hikes. The US Cboe Volatility Index, or VIX fell to 3-month low along with decline in US Dollar Index (below 106) and US Treasury yield (2-year and 10-year).
US Fed says that the quantum of rate hikes may gradually reduce as inflation is nearly peaked. Investors will get more key economic updates on Wednesday when Fed Chair Jerome Powell delivers a speech at the Brookings Institution along with GDP number and on Friday when the U.S. Labor Department would release its November jobs report. In the domestic front, monthly auto sales data will be focus next week. Market are heading towards the budget, and can expect a pre-budget move in many pockets as this will be the last full-fledged budget of the ruling government before the 2024 general election. Moreover, oil price fell to 10-month low and strong domestic economy data will support market sentiment.
Generally, FIIs’ flows in December remain muted on account charismas holiday and expect stock-specific action in the market. China’s announcement of $70bn stimulus package to boost economy, hope of US Fed to moderate hike interest rate by 50bps rather than jumbo hike, and falling oil prices will be the big positives not only in the global market but also in the domestic market. The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio for banks by 25 basis points (bps) will inject 500 billion yuan ($70 billion) of liquidity into the economy.
Technically Nifty has formed a Doji sort of candle on the daily frame and has been making higher lows from the last four sessions. It formed a Bullish Engulfing candle on the weekly frame and has been forming higher highs from the last six weeks. Now, it has to hold above 18500 zones, for an up move towards 18600 then 18881 zones whereas supports are placed at 18442 and 18250 zones.
CMP: Rs 1618| SL: Rs 1590| Target: Rs 1700
HDFC Bank has formed a strong bullish candle on the daily sale and it is forming higher high since 2 trading sessions which indicates a positive price setup. The RSI oscillator is also positively placed on daily and weekly charts indicating strength in the trend. Considering the current chart structure, we advise traders to buy the stock for an up move towards 1700 with stop loss of 1590.
CMP: Rs 327| SL: Rs 318| Target: Rs 345
Canara Bank has given a breakout of the pole and flag pattern on daily scale and follow-up buying is visible. It has formed a bullish candle on the daily scale and there is strong momentum across the PSU banking names which will support the up move. RSI oscillator is also positively placed on daily and weekly charts indicating strength in the trend. Considering the current chart structure, we advise traders to buy the stock for an up move towards 345 with stop loss of 318.
(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)