After consolidation market will react on Delhi Assembly Elections and impact of corona virus; Nifty (+3.7%), Sensex (+3.5%). Mid Cap & Small Cap index gained +6% and +4% respectively in past week, outperformance of broader markets continued due to buying in quality mid and small-caps due to attractive valuations and govt’s long term focus seen in the union budget. FIIs sold equities worth 1000 crore while DIIs bought equities worth 2200 crore, FIIs inflows have remained volatile in the equity market recently due to global uncertainty caused by corona virus. Auto, Bank, Capital Goods, Healthcare, Metal, Oil & Gas, Power and Realty stocks were top performers during last week.
Delhi assembly election results will be announced on February 11; exit polls have predicted that AAP is likely to retain power in Delhi and market will celebrate BJP’s defeat. Impact of corona virus could be one of the reasons leading to volatility in the market in the coming week, as corona virus has already taken lives of over 810 people and has infected at least 37,000 people in the China only and spread in other countries including India, Thailand, Philippines, UAE, etc. Vehicle scrappage policy for old vehicle could get cabinet approval as early as in 15 days to a month, it can be game changer for auto sector as scrappage policy is expected to put a cap on the life of vehicles in terms of years of kilometers run and if old vehicles go out of the system it will induce demand for new vehicle. We are in the last week of earning season which has so far been in line with street’s expectations about 2,500 companies will release their quarterly numbers this week, which includes frontline stocks like BPCL, IRCTC, Shree Cement, Grasim Industries, MRF, Siemens, Ashok Layland, Page Industries, Muthoot Finance etc.
IIP for December and CPI inflation for January will be important data points to watch out for in the coming week which will be released on February 12 and WPI inflation for January will be released on February 14, CPI jumped to 7.35% in December due to rise in food prices which is far ahead of RBI’s target range of 4% but we may see cool off in Jan CPI. Stability in oil prices due to demand worries in China after the virus outbreak has lifted sentiment in Indian equities, current stability in prices to help Indian economy to balance its fiscal deficit as the country imports around 80-85% of its oil requirement and it could continue to support Indian equities. INR has been in the range of 71-72 against USD for three consecutive weeks despite negative FII flow and especially after sharp fall in oil prices due to corona virus, we expect USDINR to remain in same range in coming week which is positive for Indian markets.
Monday market may open on flat note as SGX Nifty at 12,059 (-25). Nifty has taken support around the 200-DEMA 11,660 on the daily chart and closed higher and rebound above 12,000 mark, market sentiment may remain positive as long as Nifty remains above 12,000. On upper side 12,200 will act as a stiff resistance for the market, if Nifty manages to close above 12,200 then Nifty may hit new lifetime high. On lower side 12,000 will act as crucial support. India VIX fell by 18% at 14 levels, which also gives comfort to create long positions. On the options front, maximum Call open interest (OI) is at 12,200 followed by 12,100 strike while maximum Put OI is at 12,000 followed by 11,800 strike. Current option data shows a broad trading range between 11,800 to 12,200 levels on the Nifty. On lower side Nifty’s immediate support at 12,000 levels, on the higher side immediate hurdle is at 12,200.
Data shows we may see upside above 12,200 in coming week. So traders are advised to take fresh buy position above 12,200 we may see nifty rally to 12,300,12,500.
FOR INVESTORS THIS IS BUYING OPPORTUNITY ACCOUMLATE QUALITY STOCKS ON EVERY DIP, AS THIS VOLATILITY IS BECAUSE OF MAJOR EVENT BUT FUNDAMENTALS ARE VERY MUCH INTACT. VOLATILITY IS FRIEND OF INVESTOR.
Top Gainers of the Week:
Indiabulls Housing (+15.49%)
JSW Steel (+14.12%)
Tata Steel (+11.14%)
Bajaj Finance (+8.85%)
Top Losers of the Week:
Eicher Motors (-1.61%)
Zee Entertainment (-1.27%)