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Last Updated : Sep 05, 2019 08:38 AM IST | Source: Moneycontrol.com

A morning walk down Dalal Street | Market trend still negative, deploy strict stop loss

As long as the Nifty sustains above 11,746 levels, bulls can remain slightly optimistic.

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A much needed stable Wednesday after a terrible Tuesday. The S&P BSE Sensex rallied by more than 160 points while the Nifty50 reclaimed 10800 levels.

India Volatility Index (VIX) sheds nearly 5%, its biggest 1-day loss in almost 3 weeks

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Financials led the rally as Nifty Bank outperformed other indices, up 1%. HDFC Bank & ICICI Bank contributed nearly 80% to Nifty Bank’s gain.

Nifty50 was looking oversold after Tuesday’s fall and some kind of technical bounce back was required, but can we saw that we are out of the woods? Well, maybe not.

For bulls to take control, Nifty has to close above 11040 levels first and then climb above 11200 which is also near its 200-DMA.

In absence of any domestic cues, uncertainty in global markets would induce more volatility and could negatively impact investor’s sentiments.

The Indian rupee clawed back some lost ground on September 4, gaining 27 paise to settle at 72.12 against the US dollar in line with a recovery in domestic equities.

On the institutional front, FPIs were net sellers in Indian markets for Rs 1738 cr while DIIs were net buyers to the tune of Rs 1304 cr, provisional data showed.

Big News:

The Reserve Bank of India on September 4 asked banks to link all new floating-rate loans for housing, personal and micro, small and medium enterprises (MSMEs) to specified external benchmarks, including repo, for faster transmission of reduction in interest rate to borrowers.

It has been observed that due to various reasons, the transmission of policy rate changes to the lending rate of banks under the current marginal cost of funds based lending rate (MCLR) framework has not been satisfactory, RBI said in a statement.

The MCLR is the minimum interest rate a bank can charge.

It is done in a bid to allow faster transmission of its rate cuts to consumers. The move will make home loans and auto loans cheaper from October onward as the banks will now be forced to pass on the multiple rate cuts the RBI has made in recent monetary policy meetings.

Reports suggest that State Bank of India, Indian Bank, IDBI Bank, are among the dozen banks that have linked their lending rates.

Technical View:

Nifty formed a bullish candle on the daily charts

The index is still trading below crucial short-term moving averages and despite the bounce, the trend is still negative, suggest experts. Traders are advised to trade with strict stop losses as long as the index trades above 10,756-10,637 levels.

As long as the Nifty sustains above 11,746 levels, bulls can remain slightly optimistic. In case bulls eventually manage a close above 11,042 levels, traders can remain confident that recent bottom of 10,637 can hold for some more time.

Three levels: 10,746, 10,858, 11000

Max Call OI: 11200, 11700

Max Put OI: 10800, 10600

Stocks in news:

Global rating agency Moody's on September 4 upgraded the outlook on Punjab National Bank (PNB), which will merge OBC and United Bank of India with itself, to 'positive' from 'stable'.

The second largest private sector lender ICICI Bank has cut its lending rates by 0.10 percent across all maturities, sources said on September 4.

Wipro has bagged a seven-year contract worth $300 million from ICICI Bank. Under the deal, which is expected to be completed by September 30, the IT major will offer a range of services through its artificial intelligence platform Wipro HOLMES.

Technical Recommendations:

We spoke to Bonanza Portfolio and here’s what they have to recommend:

Asian Paints: Buy| LTP: Rs 1,535.15 | Target: Rs 1,654 |Stop Loss: Rs.1,485|Upside 7.75%

Kotak Mahindra Bank: Sell| LTP: Rs 1,426.45 | Target: Rs 1,310 |Stop Loss: Rs 1,500|Downside 7.74%

Maruti Suzuki India: Sell| LTP: Rs 5,830.75 | Target: Rs 5,250 |Stop Loss: Rs.6,400|Downside 10%

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.


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First Published on Sep 5, 2019 07:18 am
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