Union Budget 2020 will keep street busy in coming week; Nifty (-0.8%), Sensex (-0.8%). Mid Cap & Small Cap index gained +0.7% and +0.9% respectively in past week, outperformance of broader markets continued due to buying in quality mid and small-caps due to attractive valuations, ahead of budget. FIIs bought equities worth 1791 crore while DIIs sold equities worth 2620 crore, FIIs fund flow is expected to be more important especially going into the Budget 2020. Coming week will be longer than a usual week as markets will be open on Saturday too on the occasion of Union Budget 2020. The coming eventful week is expected to see more volatility as surrounded by earnings of heavyweights and ahead of the Budget which could be the only reason for any rally if it takes place during the week. On Monday market will first react to ICICI Bank earnings as massive jump in PAT, stable asset quality and we may see rerating in stock; we are bullish on stock and suggesting for investments since long time. 400 companies will declare their December quarter earnings in the coming week which include heavyweight stocks like SBI, ITC, HUL, Maruti Suzuki, HDFC, Dr. Reddy’s Labs, Bajaj Finance, Bajaj Finserv, Bajaj Auto, Tata Motors, Tech Mahindra, IOC, Indigo, M&M Financial, Escorts, Godrej Consumer Products, Colgate Palmolive etc.
Auto sales data for January will also be released on February 1 along with ongoing earnings season and Union Budget, so it will remain a hectic day for the market. The key event of the week would be the Budget and this time it would be much important than any other past Budgets considering the prolonged economic slowdown. Even after several measures announced by the government including a sharp cut in the corporate tax rate, the street expects more such measures that could really revive the economy sooner than later. Expectations increased significantly especially after Prime Minister Modi had a lot of long meetings with corporates, bureaucrats, etc earlier this month with the intention of faster resolution to an economic slowdown and to achieve $5 trillion targets. If the Budget does not meet the high expectations, the market can see a sharp selloff after it; so traders are advised to keep positions light in coming week and investors not to be impulsive to invest solely on the basis of Budget expectation but should invest in keeping fundamentals of the businesses in mind. The cooling off of oil prices from $70/bbl levels to around $60/bbl after threat of Corona virus spreading in China may hurt fuel demand. China is the world’s second-largest oil consumer so any slowdown in travel would show up on its demand forecasts, so possibility of crude to touch $50/bbl in coming time which is positive for Indian economy.
Monday market may open on negative note as SGX Nifty at 12,229 (-43). Nifty has taken support around the 50-DEMA on the daily chart and closed higher for the second consecutive session and forming a bullish candle on daily charts. On upper side 12,300 will act as a stiff resistance for the market and 12,050 will act as crucial support. India VIX moved up by 10.12% at 15.56 levels from 14.13. On the options front, maximum Call open interest (OI) is at 12,500 followed by 12,300 strike while maximum Put OI is at 12,000 followed by 12,200 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 12,050 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.
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:
Bharti Infratel (+11.94%)
Yes Bank (+9.04%)
Grasim Industries (+7.00%)
Indiabulls Housing (+5.89%)
Bharti Airtel (+4.84%)
Top Losers of the Week:
Coal India (-6.71%)
TATA Motors (-5.47%)