By Rahul Shah
Volatility is in the front seat. Nifty managed to close at just marginal above the 17000 marks, though we saw the sell-off from the foreign investors have cooled off compared to the week prior. There was clear underperformance of financial stocks through the month, we saw the same in the current week as well. Correction in financials has led lot of stocks very attractive for investors with a longer horizon from here. We continue to remain very bullish on Wholesale bankers – State Bank of India, ICICI Bank, and Axis Bank remains are top preference in the sector. We believe upturn in the economy, peak out of NPA cycle, credit cost will fall for these banks from here. With correction, all these large nifty stocks have fallen 12-15 per cent from there recent high. valuation wise they are very attractive and can outperform in coming quarters.
IT stocks saw outperformance during the week, plunging rupee and strong numbers from Accenture, have made IT stocks more attractive. Also, big surprise came from HCL Technologies on Friday with an open market buyback by promoter for 45 lakhs shares via open market that too premium to the earlier closing price, This put forwards the confidence in not in company but as well in the sector. We continue to remain bullish On IT sector, which has been tone of the best performing sector during the year. Going forward markets will continue se see the respond to new covid variant Omicron and the further development of the same. So far, we have seen curbs by various state governments to take preventive measures so that the spread is restricted.
Technically, Nifty has a long Lower shadow, indicating the buying was seen at declines but hurdles intact at higher levels. Now it has to hold above 17000 zones for an up move toward 17200 and 17350 zones whereas the support can be seen at 16900 and 16800 zones. India VIX @16.14, it needs to sustain for stability in the market and cooling of VIX will give comfort for bulls to be back in action .
The week ahead we expect the market to rebound and bring Santa Claus rally as a gift to traders, on other hand S&P notching a new high as investor digested the development related to omicron. Again, all eyes on monthly expiry of derivatives contract so volatility will be seen in the markets. Merry Christmas and Happy Trading
Stoploss- Rs 512 | Target- Rs 565
Birla soft retested previous breakout zones and inched higher has given consolidation breakout on daily chart with noticeable volumes and gave a highest daily close ever. Rsi oscillator is also positive placed on the daily and weekly scale. Considering the current chart structure, we advise traders to buy the stock for an up move towards 565 with a stoploss of 512.
Stoploss- Rs 2360 | Target- Rs 2535
Pidlite has formed base around 2150-2200 zone and inched higher. It has retested 50 DEMA which coincides with 38.2% retracement of the recent rise which indicates bullish bias. It has formed bullish candle on daily scale. Considering the current chart structure, we advised traders to buy the stock for up move towards 2535 with stoploss of 2360.
(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution at Motilal Oswal Financial Servcies. Views expressed are the author’s own. Please consult your financial advisor before investing.)