By Rahul Shah
Tracking negative cues from global peers, benchmark equity indices snapped four-week gaining streak and closed marginally lower dragged by auto and pharma stocks. Traders took profit booking from the higher levels due to Sensex and Nifty just 1% lower than the record high. Nifty lost 42 points or 0.2% to end trade below 18,350 levels at 18,307, whereas Sensex ended 132 points down or 0.2%, at 61,663. Sentiment has been dampen across the global markets after the US Federal Reserve officials warned of more pain ahead as they raise interest rates to fight inflation. US Dollar Index and Bond Yield spiked from the previous low after the US Fed official hawkish commentary. FIIs activity were muted and were net buyers of merely Rs 349 crore last week. However, positive factors that the Oil price fell to a 3-month low to below $88 and India Vix closed last week at 1-year low to below 15.
This week will be important not only for the domestic market but also across the global markets as US Fed minutes of meeting will be announced on Thursday along with global PMI data like the US, UK, Germany, and France. Expect market to consolidate as index is just 1% lower than the record high levels. The focus would be now on global trends for future direction due to lack of domestic triggers. Negative vibes in the developed market and aggressive comments from Fed officials have shaken the ongoing optimistic trend across the globe. Relentlessly rising interest rates are already weighing on global demand. Growth-sensitive copper and oil prices were set for weekly losses on concerns about a worsening outlook. US crude futures signaled an oversupply for the first time in almost a year.
Higher mortgage rates sent sales of previously owned US homes down for a record ninth straight month in October. Yet some equity investors said hawkish Fed commentary did not necessarily mean rates would peak at levels higher than previously thought. And traders continued to bet that the US Fed will reverse course and begin cutting rates in the later part of 2023. US Treasury yields and Dollar Index rose a day after hawkish comments from St. Louis Fed President James Bullard, who said interest rates needed to rise at least to 5%-5.25% to curb inflation.
Back Home, muted FIIs activities are major concern in the market while DIIs were back in buying seat and net buyers over Rs2000cr this week. However, positive factor that the Oil price fell to a 3-month low at $87/bbl due to slower global demand on account of increased covid cases in China, one of the largest importers in the world. Hope of range bound market next week while traders buy on dips strategy is expected in the Indian bourses. Expects, rally to continue on PSU Banks after the government’s decision to increase the maximum tenure of public sector banks’ CEO and managing director. Cement, infra and capital goods stocks may remain positive on the hope of rising government activities. Fall in oil price will be positive for oil-sensitive sectors like tyre, cement and paints.
Undertone bullish sentiment in the market due to India Vix fell to a 1-year low to below 15, strong tax collection (expected manage to fiscal deficit), strong micro data, fall in oil price, stable USDINR, and hope of favorable Union budget will be positive for the market sentiment. Nifty has formed a small-bodied Bearish candle on the weekly frame and has been forming higher lows from the last seven sessions. Now, it has to hold above 18250 zones, for an up move towards 18444 then 18600 zones whereas supports are placed at 18188 and 18000 zones.
CMP: Rs 837| Stop loss Rs 820 | Target: Rs 900
Bharti Airtel is forming higher highs since the last 4 days after given a consolidation breakout on the daily scale. On the weekly scale the stock is inching higher and is trading in the lifetime high territory which indicates strength in the trend. RSI oscillator is also positively placed on daily and weekly charts which will support the up move. Considering the current chart structure, we advise traders to buy the stock for an up move towards 900 with stop loss of 820.
CMP: Rs 1960| Stop loss Rs 1915 | Target: Rs 2065
Kotak bank has given a range breakout on daily chart and holding well above the same. Nifty Pvt Bank is showing strength from the past few days and small follow-up buying can take it to higher levels. It has formed a Bullish Marubozu candle on daily chart which implies complete dominance by the bulls. RSI oscillator is also positively placed on daily and weekly charts which will support the up move. Considering the current chart structure, we advise traders to buy the stock for an up move towards 2065 with stop loss of 1915.
(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)