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Market Headstart: Nifty likely to go lower towards 12,200 levels; ICICI Bank in focus

Trends on SGX Nifty indicate a negative opening for the broader index in India, with a 99 points, or 0.81 percent, loss

January 27, 2020 / 09:53 AM IST

Indian market likely to snap its 2-day winning streak on January 27 tracking muted trend seen in other Asian markets.

Asian stocks tumbled as investors grew increasingly anxious about the economic impact of China’s spreading virus, with demand spiking for safe-haven assets such as the Japanese yen and Treasury notes, said a Reuters report.

China announced it will extend the week-long Lunar New Year holiday by three days to February 2 and schools will return from their break later than usual.

Trends on SGX Nifty indicate a negative opening for the broader index in India, with a 99 points, or 0.81 percent, loss. The Nifty futures were trading around 12,173-level on the Singaporean Exchange.

The S&P BSE Sensex and Nifty50 fell 0.8 percent respectively for the week ended January 24 while the S&P BSE Midcap index was up 0.73 percent, and the S&P BSE Smallcap index rose 0.93 percent in the same period.

There are as many as 28 stocks in the S&P BSE Smallcap index that rose 10-30 percent which include Gujarat State Fertiliser, Power Mech, IIFL Finance, Jaypee Infratech, Alok Industries, Can Fin Homes, Unitech and Axiscades Engineering Technologies.

In the S&P BSE 500 index, there were as many as 13 stocks that rose 10-30 percent that include names like Bharti Infratel, Max India, Varun Beverages, Westlife Development, AU Small Finance Bank, and Vodafone Idea.

The Nifty Midcap 100/Nifty Smallcap 100 rose 0.9%/0.8% respectively. Market sentiments were also supported by the huge buying seen from foreign investors. FIIs pumped in nearly Rs 2000 cr in the last two trading sessions of the week, provisional data showed.

On the macro front, the country's foreign exchange reserves rose $943 million to touch a life-time high of $462.16 billion in the week ended January 17, according to the latest data from the RBI.

The rupee depreciated by 7 paise to close at 71.33 against the US dollar on Friday due to dollar demand from importers amid a correction in crude oil prices following outbreak of coronavirus in China.

On the provisional front, FPIs were net buyers in Indian markets to the tune of Rs 659 cr while the DIIs were net buyers to the tune of Rs 417 cr, provisional data showed.

Foreign portfolio investors (FPI) have infused a net sum of Rs 1,624 crore into the Indian capital markets in January so far, buoyed by the signing of the first phase of the US-China trade deal.

Big News:

As many as 28 companies will report their results for December quarter which include names like HCL Infosystems, HDFC Ltd, Music Broadcast, United Spirits, and Wockhardt.

HDFC Ltd: PAT likely to rise by more than 10% YoY

United Spirits: PAT likely to grow by 13% YoY

Music Broadcast: PAT likely to fall by 18% YoY

(All estimates are from Motilal Oswal)

Stocks in the news:
ICICI Bank on January 25 registered a healthy 158.4 percent year-on-year (YoY) growth in Q3FY20 profit, driven by lower provisions and recoveries from non-performing loans (NPLs).

Force Motors, the market leader in inter-city commuter vans, has lined up Rs 600 crore in fresh investment to develop two new models over the next two years.

Drug firm Strides Pharma Science on Friday said the US health regulator has completed inspection of its Alathur facility in Tamil Nadu with zero observations. "

Technical View:

Nifty formed a Bearish Engulfing pattern on weekly charts

Nifty made a pullback attempt but failed to close in positive. It still managed to close above 12200 levels which is a positive sign for the bulls ahead of the Budget

Traders can look to book partial profits on rallies towards 12300 levels

Technically, speaking weakness in near term shall resume on a close below 12100 kinds of levels

But, pre-budget rally could take the indices higher, suggest experts.

The underlying trend of Nifty is positive, one may expect pre-budget upside rally in the next week. There is a possibility of a new all-time high formation above 12430 levels in the next week, they say.

Three levels: 12149, 12272, 12400

Technical Recommendations:

We spoke to Angel Broking and here’s what they have to recommend:

Puravankara | Buy | LTP: Rs 68.30 | Target price: Rs 73.50 | Stop loss: Rs 64.80 | Upside: 8%

Equitas Holdings | Buy | LTP: Rs 110.35 | Target price: Rs 126 | Stop loss: Rs 101.40 | Upside: 14%

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