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Last Updated : Dec 29, 2019 10:44 AM IST | Source: Moneycontrol.com

Auto stocks in focus this week; Bajaj Auto, Maruti & Motherson Sumi preferred buys

Rollover data suggest that index has seen lower rolls compared to its quarterly average of 78.66 percent and both the indices are light on positions

 
 
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The Nifty Auto index gave a breakout from the falling trendline on the daily chart and sustaining well above the same, which is a positive sign for the auto counters, Chandan Taparia, Equity Derivatives & Technical research, Motilal Oswal Financial Services, said in an interview with Moneycontrol’s Kshitij Anand.

Q) Indian market closed on a muted note with slight negative bias snapping two straight weeks of gains. How is the first week of January likely to pan out for investors?

A) The Nifty50 index kick-started the January derivatives series on a positive note as it opened with an upside gap and continued to make higher highs throughout the session.

Eventually, the index concluded the session a tad below 12,250 level and formed a positive candle on the daily chart. However, we witnessed a Doji candle on the weekly chart of Nifty.

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It moved within the territory of penultimate week’s range and thus formed an Inside Bar pattern on the weekly chart, indicating indecisiveness among the market participants.

The Nifty breached lower highs and lower lows sequence of the last three sessions and till the time, it sustains above its support of 12,100, we maintain a positive stance on the market for an up move towards 12,350, and then towards 12,400 levels.

Q) What does the rollover data suggest for the January series? Which stocks and sectors saw strong rollovers?

A) The Nifty50 witnessed a rollover of 70.44 percent with a roll cost of 0.50 percent as compared to the previous month roll of 79.64 percent.

The index closed the December series with the marginal losses of (0.20 percent) on expiry to expiry basis. Bank Nifty closed the December series with the marginal losses (0.39 percent) on expiry to expiry basis but witnessed a higher rollover of 78.46 percent compared to the last month of 70.56 percent.

The Nifty started the January series with an open interest of 12.26 million shares compared to 14.70 million shares at the start of December series, OI remained lower on the month on month basis as some position was liquidated.

Rollover data suggest that index has seen lower rolls compared to its quarterly average of 78.66 percent and both the indices are light on positions.

Thus, a fresh build-up in the coming days will decide further trends for the January series. However, overall data setup suggests undertone of the market is bullish and we maintain our buy on dips strategy till Nifty holds above its crucial support of 11,950- 12,000 zones.

On the sectoral indices front, we saw long positions getting formed and healthy rollovers in heavyweights NBFC and metal space; while shorts were seen in the capital goods and cement sectors.

Stocks like Motherson Sumi, Tata Steel, Muthoot Finance, Kotak Bank and Hindalco witnessed a good amount of long rollovers.

While Yes Bank, BHEL, Voltas, LIC Housing Finance, and Sun TV remained under pressure in December series along with decent short formations.

Q) Auto sales numbers will be an important data point which the Street will be watching out for. Do you see a recovery in December sales?

A) The Nifty Auto index gave a breakout from the falling trendline on the daily chart and sustaining well above the same, which is a positive sign for the auto counters.

From the auto and auto ancillary space -- Bajaj Auto, Maruti Suzuki, and Motherson Sumi are our preferred picks for the coming week.

Q) Any 3 stocks which you think are still good buy on dips stocks for 3-4 weeks?

A) Considering the overall chart structure, we advise traders to buy ICICI Bank, Bajaj Finance, PVR and Manappuram Finance on declines for the coming month.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Dec 29, 2019 10:44 am
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