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Last Updated : Jan 08, 2020 09:17 AM IST | Source: Moneycontrol.com

Market Headstart: Growth pangs, US-Iran tension likely to hit D-St sentiment

Traders should remain neutral on the long side. Fresh shorting should be considered on a close below 11,980 levels with targets close to 11830, they say.

Indian market witnessed some recovery on Tuesday but advance growth estimates released by the government, and the escalating tension between the US and Iran are likely to trigger risk-off sentiment on D-Street.

Trends on SGX Nifty indicate a gap-down opening for the index in India, with 179 points loss, or 1.47 percent. The Nifty futures were trading around 11,942-level on the Singaporean Exchange.

Iran has launched over a dozen ballistic missiles targeting at least two bases where US military and coalition forces' are stationed in Iraq, the Pentagon said on Tuesday.

Close

On Tuesday, the Nifty50 reclaimed 12000-12050 levels on thanks to stable global cues, a fall in crude oil prices and recovery in the rupee.

The government has pegged the economic growth rate for 2019-20 at 5 percent, slower than the 2018-19 expansion rate of 6.8 percent. At 5 percent, the growth would be an 11-year low, CNBC-TV18 reported.

Experts feel that the market was factoring in a decline in growth estimates given the fact the Reserve Bank of India (RBI) in its last policy meeting revised the economic growth estimate down to 5 percent for FY20.

"The FY20 GDP growth estimates at 5% is on expected lines. The 5% print will put strain on the fisc forcing the govt to cut down on expenditure in Q4,” Dr. V K Vijaykumar, Chief Investment Strategist at Geojit Financial Services told Moneycontrol.

“This will further delay the recovery in growth. The growth recovery expected from Q1 FY 21 will be weak & slow,” he said.

Let’s look at the final tally on D-Street: the Sensex rose 192 points to 40,869, while the Nifty closed 59 points higher at 12,052.

Sectorally, the action was seen in realty, energy, finance, metals, and healthcare stocks. Profit-taking was seen in telecom, IT, consumer durables, and public sector indices.

Broader markets outperformed, as the BSE Midcap index was up 0.65 percent, while the S&P BSE Smallcap index gained nearly 1 percent.

Technical View

The Nifty made a bullish candle, which resembled an Inside Bar pattern on the daily charts.

It bounced back after retesting its 50-day exponential moving average (EMA) placed at 11980, and 50-DMA at 12023.

For the time, the Nifty appears to be defending its 50-day EMA, whose value is placed at around 11,980.

The consolidation process can be expected to continue as long as the Nifty sustains above the said average and weakness shall resume on a decisive close below 11,974.

Traders are advised to remain neutral till a directional move emerges in either of the directions, say experts.

Traders should remain neutral on the long side. Fresh shorting should be considered on a close below 11,980 levels with targets close to 11830, they say.

Three levels: 12,005, 12,152, 12,200

Stocks in news:

NBCC India: Company got orders worth Rs 1,090 crore in December.

NHPC: Company raised Rs 500 crore on January 3 in the second tranche through a private placement of secured, redeemable, taxable, non-cumulative, non-convertible 7.38% NHPC-Y1 Series Bonds.

Suzlon Energy, on January 7, stated that it defaulted on loans worth Rs 7,256.38 crore that was to be repaid on March 19, 2019.

Technical Recommendations:

We spoke to SMC Global Securities and here’s what they have to recommend:

Wipro | Buy | LTP: Rs 255 | Target: Rs 270 | Stop loss: Rs 241 | Upside: 6%

Shree Cement | Buy | LTP: Rs 22,005.15 | Target: Rs 23,600 | Stop loss: Rs 20,700 | Upside: 7%

Godrej Agrovet | Buy | LTP: Rs 533 | Target: Rs 573 | Stop loss: Rs 498 | Upside: 7.5%

Disclaimer: The views and investment tips expressed by investment experts 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 Jan 8, 2020 08:43 am
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