Consolidation continued on D-Street on Wednesday with Nifty registering a negative close for the fourth day while the S&P BSE Sensex closed lower for the third day.
Asian markets traded weak on January 23 as investors remained anxious about the spread of a new flu-like virus in China just as millions prepared to travel for the Lunar New Year.
The Chinese yuan fell toward a two-week low, while safe-havens such as the Japanese yen, gold, and US Treasuries rose before a travel blockade of the Chinese city, Wuhan, at the centre of the outbreak starts later on Thursday, said a Reuters report.
Trends on SGX Nifty indicate a flat opening for the index in India, with a 8 points, or 0.07 percent, gain. The Nifty futures were trading around 12,148-level on the Singaporean Exchange.
Back home, let’s look at the final tally on D-Street for January 22 – the S&P BSE Sensex was down 208 points to 41,115 while the Nifty50 was down 62 points to 12,106.
Nifty continued to consolidate in the range of 11,800-12,500. Market experts said since the index was trading near the upper band of the range, selling pressure has pushed the index towards 12,100 level. But, Nifty has strong support near 12000 levels.
“Considering the oversold nature of the markets traders are advised not to indulge in fresh shorting but will be better off by creating fresh shots on a pullback attempt with a stop above 12225 levels on a closing basis,” Mazhar Mohammad, Chief Strategist – Technical Research, Trading Advisory, Chartviewindia.in told Moneycontrol.
Most sectoral indices remained under pressure, with BSE Metal, Oil & Gas, Power and Utilities falling over a percent each. On the other hand, BSE Information Technology and Teck bucked the trend, logging gains of over a percent each.
The rupee strengthened by 2 paise to settle at 71.19 against the US dollar on Wednesday amid easing crude oil prices.
On the institutional front, FPIs were net sellers in Indian markets for Rs 176 cr while the DIIs were net sellers to the tune of Rs 326 cr, provisional data showed.
Big News:
As many as 44 stocks on the BSE are scheduled to report their results for the December quarter that include names like Biocon, Canara Bank, DB Corp, HDFC Life Insurance, HT Media, PVR, Radico Khaitan, and ZEE Media Corp.
Biocon: PAT likely to grow by nearly 6% YoY
PVR: PAT likely to grow by 53% YoY
HDFC Life Insurance: PAT likely to grow by 15% YoY
(All estimates are from Motilal Oswal)
Technical View:
Nifty formed a bearish candle on the daily charts and bounced back from 50-DMA placed at 12,106
The index has strong support near 12000 levels, but given the fact that Nifty50 witnessed fierce selling in the last 3-4 sessions, some technical bounce back cannot be ruled out
The correction or profit booking in Indian markets started after IMF lowered the GDP growth forecast for India which dampened the market sentiments along with some muted results from India Inc.
On the global front, the mood was further affected due to a breakout of coronavirus in China which concerned the global markets.
In terms of technical, Nifty closed near the trend line support of 12100
If it managed to hold above-said levels we may see a good bounce in Nifty towards 12165-12200 zone which is immediate resistance on the higher side
On the downside support for Nifty is placed at 12050-12000 zone, suggest experts.
If bulls have to reclaim lost glory then a close above 12200 levels is required
Three levels: 12050-12087, 12225, 12300
Max Call OI: 12500, 12300
Max Put OI: 12000, 11500
Stocks in the news:
Private sector lender Axis Bank was in the black in the December quarter reporting a 4.5 percent year-on-year gain in net profit at Rs 1,757 crore.
RBL Bank on January 22 reported a 69 percent fall in its Q3 net profit following an increase in the provisions of the company.
Infrastructure and engineering major Larsen & Toubro (L&T) reported profit growth of 15.15 percent year-on-year (YoY) to Rs 2,352 crore in the quarter ended December 2019, driven by lower tax cost (down 37 percent YoY) and operating income.
Technical Recommendations:
We spoke to Bonanza Portfolio and here’s what they have to recommend:
Ramco Cements | Buy | LTP: Rs 830 | Target: Rs 890 | Stop Loss: Rs 797 | upside: 7%
CreditAccess Grameen | Buy | LTP: Rs 795 | Target: Rs 890 | Stop loss: Rs 736 | Return: 12%
Bajaj Finserv | Sell | LTP: Rs 9,545 | Target: Rs 9,100 | Stop loss: Rs 9,800 | Downside: 5%
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