Closing Bell: Nifty ends above 16,700, Sensex gains 497 pts led by IT, metal, realty

The Nifty had reached the support zone of 40 WEMA & the weekly lower Bollinger Band after the sharp decline on December 20. From these support parameters the index witnessed a bounce on December 21. With this bounce the index attempted to fill up a gap which was created on the daily chart recently.

The benchmark index partially filled up the gap of 16840 – 16966 & faced resistance near the upper end of the gap. The overall structure shows that the Nifty is set for a short term consolidation in the range of 16400-17000. Any dip towards the lower end of the range will be a staggered buying opportunity for positional traders.

Indian market is attempting to recover from yesterday’s heavy selloff, domestic indices staged a gap-up opening on bargain hunting supported by positive sentiments across global markets.

Although concerns surrounding the impact of Omicron & FII selling still lingers, investors are trading cautiously and are optimistic. Gains in IT, commodities and metal stocks lifted the indices higher.

Index opened a day with a good gap but again we have witnessed profit booking from higher-end resulting index erased some of its gains & closed a day at 16770 with gains of one percent & formed a Doji candle on the daily chart which represents indecision in the markets.

On the higher side index has a strong hurdle zone around 16850-16950 and any decisive break above mentioned zones can attract more bulls which can push the index to northwards but if continued to trade below said resistance then one can also witness profit booking towards immediate support zone of 16630-16500 zone.

Rupee Close:

Indian rupee ended higher by 31 paise at 75.60 on Tuesday against previous day close of 75.91.

The dollar hovered below recent highs on Tuesday having lost ground overnight after a blow to Democratic spending plans in Washington, but worries about the Omicron coronavirus variant kept risk currencies in check.

Benchmark indices broke the two-day losing streak and ended higher on December 21 with Nifty above 16,700 level.

At close, the Sensex was up 497 points or 0.89% at 56,319.01, and the Nifty was up 156.60 points or 0.94% at 16,770.80. About 2204 shares have advanced, 1033 shares declined, and 111 shares are unchanged.

HCL Technologies, Wipro, UPL, Adani Ports and Tata Steel were among the top Nifty gainers. Losers Power Grid Corporation, Axis Bank, Bajaj Finance, Cipla and SBI.

All the sectoral indices ended in the green with realty, capital goods, pharma, energy, IT and metal indices added 1-3 percent. BSE midcap and smallcap indices gained over 1 percent each.

Foreign research firm UBS has kept the buy call on Godrej Consumer Products with a target at Rs 1,175 per share.

The new MD & CEO, outlined strategy for next 3-5 years. He intends increasing investments by reduction in overheads & lower discounts/BTL spends.

The company to focus on category development, driven by higher A&P spends, sampling & distribution. The company expects gross & EBITDA margins to recover only in FY23.

Godrej Consumer Products was quoting at Rs 936.75, up Rs 48.40, or 5.45 percent on the BSE.

We value Nykaa using DCF valuation methodology with explicit forecasts until FY41 to align to the long-term penetration story.

Using 10.5% cost of capital and 6.0% perpetuity growth rate, we derive Dec’22 target price of Rs 2,480 per share (~27% upside from CMP) and initiate coverage with a buy rating.

FSN E-Commerce Ventures Nykaa was quoting at Rs 1,968.40, up Rs 23.10, or 1.19 percent on the BSE.

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The initial public offering of CMS Info Systems has been subscribed 29 percent, so far, on the first day of bidding, on December 21. It has received bids for 1.08 crore equity shares, against the IPO size of 3.75 crore equity shares.

Retail investors have put in bids for 57 percent of shares reserved for them. Non-institutional investors portion booked 1 percent, while qualified institutional investors are yet to put in bids for the offer.

Metro Brands has shown growth, profitability, and financial discipline in the past, but the sector is widely underrated. The company has an asset-light business model and derives most of its revenues from third parties.

We are seeing a change in IPO sentiment amid a slight decline in the market, and the last two debutants witnessed profit bookings post-listing, as well we are seeing a decline in the GMP for upcoming IPOs. We may see a discount listing of Metro Brands given that its GMP trades at a discount of 10-15% currently.

Market erased some of the intraday gains but still trading higher with Nifty around 16,800.

The Sensex was up 677.85 points or 1.21% at 56499.86, and the Nifty was up 202.10 points or 1.22% at 16816.30. About 2280 shares have advanced, 788 shares declined, and 82 shares are unchanged.