A lackluster beginning after a poor show in the previous week where Nifty ended with weekly declines of 0.44%. What does the chart indicate about its trajectory and what are the important levels for Nifty and Bank Nifty?
Markets witnessed choppy trading sessions last week with the benchmark index Bank Nifty saving the day. A sharp rally in ICICI Bank, Axis Bank, SBI and HDFC Bank helped in the benchmark indices recover from the lows of the week with Nifty ending lower with weekly decline of 0.44% whereas Bank Nifty ended the week in the green, up 1.8% WoW. Most of the technical and derivatives indicators point towards a consolidation this week, with markets likely to be further driven by quarterly earnings, FII flows, geo-politics, and global market sentiments.
Looking at Nifty, it has crucial support around the 24,500-24,600 zone, a consistent breach below this level could trigger the next bout of selling. Whereas on the upside, immediate resistance is seen around the 25,200-25,300 zone.
As far as Bank Nifty is concerned, support is seen around the 51,200-51,300 zone whereas resistance is around the 52,500-52,700 zone. The good news is that with India VIX hovering around the 13 mark, investors appear to have taken the recent sell-off within their stride. However, staying cautious would do no harm at the current levels.The earnings season does not seem to have enthused the markets. What is your assessment of results from big guns till now and outlook for the rest of the season?
Overall, the earnings season so far has been mixed, with investors keeping a close watch on this week’s earnings reports, including the likes of heavyweights such as ICICI Bank, Hindustan Unilever, ITC, Bajaj Finance, Bajaj FinServ, Ultra Tech Cement, Coal India, JSW Steel, ICICI Prudential, TVS Motors, to name a few.
Overall, expectations are that recovery might be muted in the near term, but the medium-to-long term outlook remains positive. Also, the built up investor expectations might be difficult for many of the corporates to match, so markets, overall, are adopting a wait and watch policy.
All big IT companies have declared their results so will it be in your radar and if yes which stocks will you be picking and for what targets?
IT stocks had earlier witnessed a decent rally, with the heavyweights such as HCL Technologies, Infosys, TCS, Tech Mahindra and Wipro, were up anywhere between 10% – 25% YTD, clearly reflecting the investor interest in the sector. However, post fears of looming recession in the USA, cutback in discretionary spending by corporate in the USA and Europe, coupled with tech layoffs in the USA, added to the investor anxiety. Post the sharp rally, we witnessed profit booking in many IT counters, however, IT as a sector cannot be ignored by investors looking at diversifying their portfolio, hence, a mix of large-cap and midcap ideally should be part of the portfolio.
What should the investors do with FMCG and auto which have been the biggest laggards this week?
Both the Nifty FMCG and the Nifty Auto indices have corrected by almost 7% in October itself, clearly indicating that both these sectors witnessed profit booking on the back of a spectacular rally witnessed earlier during the year. With tepid expectations from both sectors in the ongoing festival seasons, investor sell-off is seen on concerns over their future earnings.
Further, with the two-wheeler giant i.e. Bajaj Auto’s weaker than expected sales projections for the festive season, also added to the weakening of investor sentiments, apart from the not so encouraging monthly sales data for the auto-sector, also appears to have dampened investor expectations. Investors should look at buying opportunities in both these sectors from a long-term perspective but at the same time, need to be selective in their investment approach.
Motilal Oswal, Usha Martin and HPCL grabbed eyeballs with big rallies while Manappuram Finance, DMart and Bajaj Auto were among the worst losers? What should investors do with them?
Motilal Oswal and Usha Martin hit record highs, ending the week with gains of 27% and 2% WoW, whereas HPCL gained almost 9%, trading slightly below its all-time highs. Investors are advised to book profits in all these counters as on one hand, the run-up has been very sharp in Motilal Oswal whereas in the case of Usha Martin and HPCL, both the stocks are trading close to resistance zones.
On the losing front, Manappuram lost 18%, DMart lost 13% and Bajaj Auto lost almost 15% WoW, with investors losing substantially over the past week. At the current levels, it would not be advisable to exit unless the recent lows are breached, and prices sustain below them. It is quite likely that these stocks shall enter a consolidation zone for some time, till fresh triggers emerge for these stocks.
Hence, investors can hold onto these stocks and should look at exit opportunities on any pullback in case they have a short-term perspective. For long-term investors with a 5-10 year investment horizon, corrections can be used as opportunities to add to their positions in a stock SIP mode.
Also Read: Bajaj Finance Q2 results preview: NII may jump by up to 28% YoY on loan growth, NIMs to decline sequentially
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)