Month: April 2024

Buy these two stocks for near term gains as equity indices look set to jump further

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By Subash Gangadharan

Markets have bounced back strongly after the sharp selloff seen last Monday. The Nifty index made a long-legged Doji candlestick bullish reversal pattern on the weekly chart last week. This indicates that the bulls have overpowered the bears as the markets had recovered most of the losses seen during the early part of last week. This week too the Nifty has continued to surge higher to new life highs.The short term uptrend is, however, looking matured as the short term moving averages on the intraday charts have started to flatten. This indicates that markets could rise a bit more from current levels and consolidate in a range for the near term.Crucial supports to watch for a short term trend reversal are at 13864-13842.The below picks are for the next 15-26 trading sessions

Today, the stock also closed above the 20 day SMA, a sign of short term strength. Short term momentum readings like the 14-day RSI too has bounced back and is showing strength.

We believe the stock is ready to continue the next leg of its underlying uptrend and has the potential to move higher in the coming sessions. We, therefore, recommend a Buy between the 7560-7615 levels. CMP is 7609. Stop-loss is at 7430 while targets are at 8000.

Buy Balkrishna Industries

After correcting from a high of 1720 touched in early December 2020, Balkrishna Industries found support at the 50 day SMA around the 1515 levels. The stock has since then gradually climbed higher making higher tops and higher bottoms in the process.

Today, the stock broke out of the 1550-1590 trading range on the back of above-average volumes and also closed above the 20-day SMA in the process. Short term momentum indicators like the 14-day RSI too have bounced back from oversold levels. This augurs well for the uptrend to continue.

We believe the stock is ready to move higher in the coming weeks. We, therefore, recommend a Buy between the 1590-1625 levels. CMP is 1620. Stop-loss is at 1550 while targets are at 1760.

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. The views expressed are the author’s own. Please consult your financial advisor before investing.) 

Will bears drag Nifty to 16800 or bounceback on cards? 5 things to know before share market opening bell

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After Monday’s rout, the Indian share market may witness a slight bounce back amid mixed global cues. Early trends in the SGX Nifty hinted at a flat to positive opening for NSE Nifty 50 and BSE Sensex. “The RBI’s decision and the outlook would hold great importance post the rate hikes announced by many Central Banks globally following the US Fed aggressive outcome. Even the monthly F&O expiry this Thursday would keep the markets volatile. Fragile global factors and FII outflows would continue to keep the pressure on the market and thus 17000 level would act as a key support level, below which the weakness could intensify,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.

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Nifty technical view: “A long bear candle was formed on the daily chart with an opening downside gap. Technically, this market action indicates a sharp down-trended movement in the market. After a decisive downside breakout of the immediate support of minor up trend line at 17500 levels, the Nifty is now sliding down to the crucial lower support around 16800 levels as per the concept of change in polarity. There is a higher possibility of an upside bounce from the lower support in the short term. The short-term trend of Nifty is sharply down, and the weakness is expected to continue for the next 1-2 sessions,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

Nifty, Bank Nifty levels to watch for: “Nifty has breached psychological 17000 levels, as 17250-17320 will now act as immediate resistance, whereas support is placed around the 16800 levels. On daily charts, Bank Nifty has formed three black crow patterns, indicating that bears have taken control. Nonetheless the 39800 level is crossed and sell on rise is advised for the short term. India VIX, meanwhile closed at 21.89 levels as it surged over 6.31 per cent intraday. Dips should be utilized to accumulate quality stocks,” said Om Mehra, Technical Associate, Choice Broking.

Rupee: The rupee plunged 58 paise to close at an all-time low of 81.67 (provisional) against the US dollar on Monday as the strengthening of the American currency overseas and risk-averse sentiment among investors weighed on the local unit. Moreover, escalation of geopolitical risks due to the Russia-Ukraine conflict, a negative trend in domestic equities, and significant foreign fund outflows lowered investors’ risk appetite further dragging the domestic currency, according to forex traders.

Also Read: Sensex ends at 2-month low, Nifty support shifts to 200-day SMA at 16850; use volatility to buy quality stocks

Stocks under F&O ban on NSE: Vodafone Idea, Zee Entertainment Enterprises, and Punjab National Bank are the three stocks under the NSE F&O ban list for 27 September. Securities thus banned under the F&O segment include companies where derivative contracts have crossed 95 per cent of the market-wide position limit.

Investors’ wealth dips Rs 76,196 cr amid sell-off in markets

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Investors’ wealth eroded by Rs 76,196.54 crore on Wednesday, with the market witnessing a sell-off amid rising concerns over possible aggressive interest rate hikes to tame high inflation.

The market capitalisation of BSE-listed companies — which is also an indicator of wealth of investors — tumbled Rs 76,196.54 crore to Rs 2,85,94,997.40 crore amid the 30-share Sensex falling 224.11 points or 0.37 per cent to 60,346.97 points.

The 30-share index rebounded more than 1,200 points from the early lows before settling at 60,346.97 points, a loss of 224.11 points or 0.37 per cent compared to Tuesday’s closing level.

The broader NSE Nifty closed lower 66.30 points or 0.37 per cent at 18,003.75 points.

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The Sensex had plunged 1,150 points to a low of 59,417.12 points, while the Nifty declined to a low of 17,771.15 points in early trade on Wednesday, following deep losses in US markets.

Tracking the weak trend in equities, the market capitalisation of BSE-listed firms had tumbled by Rs 2.21 lakh crore in initial deals. However, the markets showed steady recovery and pared most of the losses to settle 4 per cent down.

According to Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services, Indian markets displayed strong resilience in the face of negative global cues.

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While markets opened 1.6 per cent lower, it showed steady recovery throughout the day to wipe out the entire opening loss and managed to close near day’s high with marginal loss of 0.4 per cent.

“Controlled inflationary environment v/s global peers, strong flows from retail, domestic as well as foreign institutions continue to drive the domestic equities.

“Although there can be bouts of volatility due to adverse global cues. Support base buying at lower levels are giving much needed strength to the Indian markets and any sharp decline will be good opportunity to buy in Indian equities,” Khemka added.

INDICES ON A CRASH COURSE; VIX SURGES 8%: Bear hug on recession fears

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Equities tanked on Friday amid weak global cues as concerns of a global recession, sticky inflation, rising commodity prices and the possibility of aggressive tightening by central banks spooked investors.

As central banks across the world simultaneously hike interest rates in response to inflation, the world may be edging toward a global recession in 2023 and a string of financial crises in emerging markets and developing economies that would do them lasting harm, a new study by the World Bank said.

“Global growth is slowing sharply, with further slowing likely as more countries fall into recession. My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging market and developing economies,” said World Bank Group president David Malpass.

Also Read: Warning signs flashing for global recession in 2023, as interest rate hikes threaten economic growth

The benchmark BSE Sensex slid over 1,200 points on Friday before closing at 58,840, down 1,093 points or 1.8%. The gauge has shed 1,731 points, or 2.9%, in the last three sessions and has slid 1.6% the past week. The Nifty 50 settled at 17,530, down 346 points or 1.9%. The broader markets also suffered, with the Nifty midcap and smallcap falling in the range of 2.5% to 3%. The Volatility Index — India VIX — surged 8% to settle near 20-odd level.

Most Asian indices ended in the red too, with Jakarta Composite (1.9%) and Shanghai Composite (2.3%) slipping the most.

Index heavyweights such as Reliance Industries, Infosys, HDFC Bank, TCS and ICICI Bank contributed the most to the fall. All sectors ended in the red, with realty, IT, oil & gas, consumer durables and auto falling the most.

Volumes on the NSE were the highest in since May 31, partly aided by FTSE rebalancing trades. The advance decline ratio was sharply negative at 0.23:1. India VIX, an index that measures volatility, jumped 7.8% to 19.82.

Global ratings agency Fitch on Thursday slashed its growth forecast for the Indian economy to 7% in 2022-23 from 7.8%, with 2023-24 growth to slow further to 6.7% from 7.4% projected before.

“Investors are expecting an aggressive rate hike next week, with one-third of market respondents expecting the Fed to do 100 basis points, whereas a 75 bps hike is mostly discounted. The adverse rub-off impact of this was felt in the Indian equity market also, over the last three sessions, including extended losses on Friday,” said Aishvarya Dadheech, fund manager, Ambit Asset Management.

Indian equities have been resilient in the last couple of months and outperformed major global markets by a wide margin.

The turnaround in FPI inflows in equity markets and rising expectations of India’s inclusion in the global bond market indices have led to a stable currency and resilient bond markets over the last month. FPIs have shopped for equities worth $1.5 billion in September.

The external environment, however, remains challenging, with global commodity prices remaining meaningfully above pre-pandemic levels.

“It exposes the economy to uncertainty especially on external stability. Indeed, the trade deficit remained near all-time highs in July and August and we expect the current account deficit to track near 10-year high of 5% of GDP in quarter ended September. While the CAD has widened, a turn in FPI flows in August, alongside FX intervention by RBI (FX reserves are down $20.8 billion since July end) have helped to keep the currency steady,” said a report by Morgan Stanley.

The RBI most likely will have to raise rates by 50 bps in its next policy meet to combat pressure on the rupee, according to experts. The yields on Indian 10-year government securities spiked 15 bps to 7.25% in the last three days.

“We believe the market is likely to be volatile in the near term. Investors should use the volatility in the coming weeks in a phased manner to build a position with a view of 12-18 months in quality companies where earnings visibility is high,” said Neeraj Chadawar, head – Quantitative Equity Research, Axis Securities.

According to him, domestic-oriented themes like banks, FMCG, hospitals, domestic industrials, and discretionary consumption are well placed over export and cyclical-oriented themes.

Delhi Schools Diwali, Chhath holiday list – Know all dates in October, November and December

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Delhi School Diwali Holiday List: For students, holidays represent an indispensable aspect of their academic life, eagerly awaited and cherished for various festivities and national celebrations such as Gandhi Jayanti, Diwali, and Dussehra. These breaks offer not only respite from the demanding school routine but also serve as occasions for rejuvenation and family bonding. The compilation of upcoming holidays serves as a convenient guide, allowing students to effectively plan their activities during the Delhi School Closure. It encourages them to utilize this time wisely, engaging in recreational pursuits, pursuing personal interests, and embracing valuable moments with loved ones.

Below is a list of holidays for the month of October, November and December:

Gandhi Jayanti – October 2, 2023Maha Panchami – Dussehra – October 19, 2023 to October 24, 2023Maharishi Valmiki Jayanti – October 28, 2023

November

Diwali: November 12, 2023Bhai Duj: November 15, 2023Chhat Puja: November 19, 2023Guru Tegh Bahadur’s Martyrdom Day: November 24, 2023Guru Nanak Jayanti: November 27, 2023.

December

Christmas Eve: December 24, 2023Christmas: December 25, 2023New Year’s Eve: December 31, 2023

Schools to remain closed on October 28

On the occasion of Maharishi Valmiki Jayanti, schools in Delhi and other states will be closed. Parents and students are advised to contact the school authorities for any queries.

Global fund managers raise cash allocation to 21-year high: BofA

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Fund managers across the world are gravitating to cash amid rising inflation, central bank tightening and geopolitical tensions. Bank of America’s September Global Fund Manager Survey (FMS) characterises this mood as “super-bearish”, with allocation to cash inching up to 6.1% in August, the highest in 21 years and well above the long-term average of 4.8%.

According to the survey, the short-term “pain trade” is up once again for risk assets, the global growth expectations are near all-time lows and the maximum bearish sentiment prevails.

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In India, three of the top 20 fund houses by equity assets – SBI MF, Axis MF and PPFAS – were holding more than 10% in cash at the end of August, according to Motilal Oswal Financial Services. Another four – ICICI Prudential MF, Franklin Templeton MF, IDFC MF and PGIM India – had cash levels of between 5% and 10%.

According to FMS survey, investors cut their net underweight in stocks further to -52% in September while pushing longs to defensives to 53%, the highest since February 2009.

The Fed will end hiking rates in Q2 of 2023, according to 36% of FMS investors. FMS investors have repriced terminal Fed funds rate much higher in the past month, with 38% now seeing the Fed hiking rates till 4-4.25%, versus 3.5-3.75% in August 2022.

A net 61% of FMS investors see the US dollar as the most overvalued, up 2 ppt month-on-month to a record high. Net 72% expects weaker economy next year and net 79% expects lower inflation in the next 12 months.

The share of FMS investors saying recession is likely increased further in September to 68%, the highest since May 2020. Since its post-pandemic peak of 80% hit in June 2022, the share of investors believing the economy is in its late-cycle phase has dropped continuously to 67% in September. Historically, a drop of this magnitude and length has coincided with a recession.

The ongoing energy crisis in Europe will likely push the domestic economy into a recession, according to almost 70% of FMS investors.

Close to 70% of FMS investors expect China GDP growth in 2022 to slow to 4% or less versus 57% one month ago, much below the average real GDP growth of 8.8% observed since 1990.

Two hundred forty panellists with $695-billion AUM participated in the August survey. Two hundred twelve participants with $616-billion AUM responded to the Global FMS questions and 121 participants with $265-billion AUM responded to the regional FMS questions.