By Rahul Shah
Equity benchmark index completed a third monthly slide (Sensex down 883 points or 1.5% in April) this year as higher oil prices, geopolitical tension, FIIs selling, prolonged war between Russia-Ukraine and sharp decline in global market dampen the sentiments. After trading within a 500-point range for the entire week, the Sensex ended in the red on Friday. Finally, Sensex slipped 136 points or quarter percent while Nifty shed 69 points or 0.4% against the previous week close.
This week will be very important in India as well as global bourses. Mega LIC IPO worth Rs 21,000 crore will be coming out on May 4, which may pull out money from the secondary market to primary market. Traders are advised to avoid bargain hunting in the market till a clear trend emerges. US Federal Reserve interest rate decision will be held on May 5. Bank of England interest rate policy decision also to be announced on the same day.
Wall Street wrapped up a dismal April marked by investor hand-wringing over rising interest rates, relentless inflation, surprise corporate earnings results and global unrest. Dow Jones slipped 1000 points against the previous week’s close. The S&P 500 erased 9 percent in April, its worst month since March 2020. It’s also down 14 percent in 2022, its worst start to the year since World War II. On the domestic front, quarterly results and auto monthly sales numbers will be in focus during a short spun next week (Tuesday holiday).
Continued FIIs selling (over Rs 11000 crore FIIs net sellers this week), geopolitical tension and spiked in oil prices are major concerns in the market. The US dollar index scaled its highest since January 2017 above 103, fueled by the expectations that the US Federal Reserve will be more aggressive than its peers and concerns over slowing growth in China and Europe. The US central bank is expected to increase interest rates by a hefty 50 basis points at its May 3-4 meeting to bring inflation under control. Investors also remained cautious about China’s Covid situation amid fears that Shanghai-style lockdowns may spread to other parts of the country, while Russia’s latest move to cut gas supplies to Bulgaria and Poland escalated an energy crisis in Europe.
Nifty is trading between its 50 DEMA and 200 DEMA placed at 17248 and 16865 respectively. It has formed a bearish candle on the daily scale and has been facing resistance at higher levels of 17350-17500 zones. We expect volatility to continue and supports on the lower side are placed at 17000-16800. Nifty is likely to trade in a broad range of 16800 to 17500 zones.
Target: 2500 | Stop loss: 2280
ACC has given a trendline breakout on the daily charts and has been making higher highs since last few trading sessions. It has formed a bullish candle indicating buying interest. There is positive momentum across the cement space which will support the prices to continue the up move. RSI oscillator is also positively placed on the daily and weekly scale. Considering the current chart structure, we advise traders to buy the stock for an up move towards 2500 with a stop loss of 2280
Asian Paints: Buy
Target: Rs 3400 | Stop loss: Rs 3150
Asian Paints has given a breakout of the falling trendline and has formed a bullish candle on the daily chart indicating strength in the counter. RSI oscillator is also positively placed on the daily and weekly scale. 3 Considering the current chart structure, we advise traders to buy the stock for an up move towards 3400 with a stop loss of 3150.
(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.)