After geopolitical tension between US and Iran now pre-budget rally will drive the market.
After geopolitical tension between US and Iran now pre-budget rally will drive the market; Nifty (-0.2%), Sensex (-0.3%). Mid Cap & Small Cap index gained +1.24% and +3.26% respectively in this week, small cap & midcap stocks are outperforming the market we are expecting bounce back from mid & smallcap stocks. FIIs sold equities worth 1155 crore while DIIs bought equities worth 1203 crore, FIIs fund flow is expected to be more important especially going into the Budget 2020. Auto and banks stocks fell during the week, whereas healthcare, IT, metals and power gained strength. Volatility is likely to increase with positive sentiment in coming days, as we approach the Budget day and amid Q3 earnings. On Monday market will first react to Infosys and Dmart earnings both turned out positive for markets as better than street’s expectations. November industrial output data that were announced on Friday which grown to 1.58% in November, back in positive after 3 months showing recovery in economy. Globally the key factors to watch out for would be the signing of phase one of the trade deal between the world’s largest economies are expected to sign a partial trade deal on January 15, global risk has reduced in 2020 with likely trade deal between US-China, Brexit and in anticipation of improvement in the world economy. 75 companies will declare their December quarter earnings in the coming week which include heavyweight stocks like Reliance Industries, TCS, HDFC Bank, IndusInd Bank, Wipro, HCL Technologies, Mindtree, Delta Corp, Bhandhan Bank, L&T Infotech, L&T Finance, L&T Technology, ICICI Lombard etc.
CPI inflation for December will be announced on January 13, which is likely to increase further from 5.54% in November to 6.7% due to increase in oil and food prices. WPI inflation for December will also be announced on January 14 and the balance of trade data for December will be released on January 15. The cooling off of oil prices from $70/bbl levels to around $65/bbl after easing US-Iran tensions could continue to support the country like India which imports more than 85 percent of oil requirement. As a result of cooling off geopolitical tension between US and Iran the Indian rupee also strengthened during the week to close at 70.94 against the USD and INR appreciated 100 paisa from 71.94 on January 6. We expect the rupee to gain further amid the signing of US-China trade deal this week towards 70.50. US-China trade deal phase one signing would be major relief for global equity markets and the economy, which have been facing trade concerns for more than 16 months now.
Monday market may open on flat to positive note as SGX Nifty at 12,305 (+14). Nifty respected to its key support of 11,900-11,935 levels along with the 50 DEMA on daily scale but failed to sustain above 12,300 and closed to day’s low. Nifty is expected to consolidate before moving towards 12,400-12,500 levels in coming days as the momentum is expected to remain positive at least till Union Budget. On upper side 12,300 will act as a stiff resistance for the market and 12,000 will act as crucial support. India VIX moved up by 10.87% at 14.08 levels from 12.70. Cool of in VIX from higher levels from 16.39 mark has provided some comfort to bulls but overall comparatively higher VIX could keep the volatility in the market in near term. On the options front, maximum Call open interest (OI) is at 12,300 followed by 12,500 strike while maximum Put OI is at 12,200 followed by 12,000 strike. Current option data shows a broad trading range between 12,000 to 12,500 levels on the Nifty. On lower side Nifty’s immediate support at 12,200 levels, on the higher side immediate hurdle is at 12,300.
Data shows we may see upside above 12,300 in coming week. So traders are advised to take fresh buy position above 12,300 we may see nifty rally to 12,500 (Above 12,500 lightning rally can be seen).
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:
Ultratech Cement (+5.34%)
Tata Motors (+2.75%)
Mahindra & Mahindra (+2.60%)
Adani Ports (+2.50%)
Asian Paints (+2.35%)
Top Losers of the Week:
Yes Bank (-4.99%)
Indiabulls Housing (-4.70%)
Zee Entertainment (-3.91%)
Eicher Motors (-3.57%)