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Last Updated : Jan 20, 2020 12:35 PM IST | Source: Moneycontrol.com

'Correction in Nifty likely ahead of Budget; HDFC AMC, D-Mart among top breakout buys'

Modi government’s biggest announcement of the corporate tax cut in September 2019 has hinted towards their intention of aggressively attracting new investments and job creation.

 
 
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Corporate tax cut by the Modi government showcases the Centre's intention of aggressively attracting new investments and job creation, Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor, said in an interview with Moneycontrol’s Kshitij Anand.

Edited excerpts:

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Q) US market scaling new peaks along with hopes of new measures in the Union Budget is fueling optimism on the Street. What factors do you think can drive the rally which looks broad-based compared to what we saw in 2019?

A) Positive expectations from the upcoming Budget 2020 is a major driving force behind the ongoing rally. Investors are hoping for relaxation on the income tax front.

The government’s action plan over the country’s growth revival is something that investors are expecting from this Budget.

It has been evident over the past few months that the government is concerned about sluggishness in the economy. The finance minister Nirmala Sitharaman has taken various steps to revive the economy.

Corporate tax cut by the Modi government showcases the Centre's intention of aggressively attracting new investments and job creation.

Investors are also hoping for relief in LTCG, along with some relief over DDT (Dividend distribution tax).

Q) After the recent run-up what will you advise investors leading up to the Budget. Do you think we could be in the final leg of the upwards move (short term)? What are the major support and resistance levels which one should watch out for? 

A) It would be wise to lighten the portfolio and off-load some holdings in overvalued stocks ahead of the Budget as a correction is expected in the Nifty indicated by RSI Divergence and new positions would not be advised until this event.

The level of 12,200 is a major support for the Nifty and 12,500 can be considered as a major resistance ahead of the Budget 2020.

It seems that we are in the final leg of upwards move as seen by shrinking momentum and a minor correction phase is very much expected.

Q) It has been a great week for Indian markets with Sensex climbing above Mount 42K and Nifty50 hitting fresh record highs closer to 12,400 levels? Do you think the momentum should hold in the coming week as well?


A) Benchmark indices have seen fresh highs in the last three out of five trading sessions. To hold the momentum in the coming weeks, 12,300 and 41,700 will be the key support levels for Nifty and Sensex respectively.Benchmark indices might see a fresh high before the announcement of the Budget.  We can see levels of 12,500 ahead of budget, but investors should be careful and could look at off-loading their holding, as the budget will play a key role for the momentum of the Nifty and Sensex in the coming week.

 

Q) Any three stocks which are looking promising breakout buys for the coming week? 


A) Here is a list of top three stocks that are looking promising breakout buys:

D-Mart: Buy | LTP: Rs 1,989 | Buy above Rs 2,010 | Target: Rs 2,120 | Stop Loss: Rs 1,950 | Upside 6%

The stock is sustaining above major moving averages on the daily chart and a close above this level could result in good upside momentum.

We recommend buying the stock above Rs 2,010 for the target of Rs 2120, keeping a stop loss at Rs 1,950 on a closing basis.

PEL: Buy | LTP: Rs 1,627 | Buy above Rs 1,655 | Target: Rs 1,715 | Stop Loss: Rs 1,605 | Upside 5%

The stock is consolidating and is ready to witness resistance breakout from the current level and breaching this level can result in good upside momentum.

We recommend buying the stock above Rs 1655 for the target of Rs 1715, keeping a stop loss at Rs 1605 on a closing basis.

HDFC AMC: Buy | LTP: Rs 3,263 | Buy above Rs 3,285 | Target: Rs 3,390 | Stop Loss: Rs 3,190 | Upside 4%

The stock is trading in a very narrow range and bounced from its important moving averages, along with given closing above its important averages.

Breaking resistance from the levels of 3,270 can lead to a bullish movement. We recommend buying the stock above Rs 3,285 for the target of Rs 3,390, keeping a stop loss at Rs 3,190 on a closing basis.

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.



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First Published on Jan 20, 2020 12:35 pm
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