Closing Bell: Nifty around 20,200, Sensex up 320 pts; autos rally, oil & gas slips

Taking Stock: Markets at fresh record high; Nifty around 20,200, Sensex gains 320 points

Biggest gainers were Bajaj Auto, Grasim Industries, M&M, Hero MotoCorp and Bharti Airtel, while losers included BPCL, Asian Paints, HUL, Jio Financial and Tata Consumer Products.... Read More

The Nifty continued to exhibit strength as the index reached new highs. Strong Put writing at 20,100 has further bolstered positive sentiment in the market. The trend is expected to remain positive as long as the Nifty remains above the 20,000 mark. In the short term, there is potential for the Nifty to move towards the 20,480-20,500 range on the upside.

The sentiment remains positive as the Bank Nifty approaches its all-time high. The strong presence of Put writers at 46,000 has supported the index to stay in positive territory. The trend is anticipated to stay bullish as long as the Bank Nifty remains above the 46,000 mark. In the short term, there is potential for the Bank Nifty to reach levels around 46,700 and 47,000 on the upside.

Nifty scaled fresh life highs on Friday rising for the third consecutive session to end at a record close. Sensex rose for the 11th day, the longest streak of gains since October 2007. At close, Nifty was up 0.44% or 89.3 points at 20192.4. Volumes on the NSE continued to be on the lower side. Broad market indices rose less than the Nifty even as the advance decline ratio fell but remained above par at 1.26:1.

Global equities rose Friday after better-than-expected Chinese economic data added to expectations that tightening campaigns by the world’s biggest central banks were close to over. The Arm IPO optimism and China’s further stimulus measures boosted sentiments.

Nifty continued its gradual move up on Friday with a 93 points intraday high low range. Post the making of fresh life highs, Nifty’s upward momentum has been calibrated. On weekly charts Nifty gained 1.88% almost matching the previous week’s rise. Nifty could now stay in the 19979-20340 band for the near term.

The Nifty opened on a positive note and consolidated with a range to close the day on a positive note up ~89 points. On the daily charts we can observe that the up move in Nifty has slowed down since the last three trading sessions. The slope of ascend has been shallow. The reason we attribute to this price action is that it has reached the zone of 20100 – 20200 where the weekly upper Bollinger band is placed which is resulting in subdued price action. The hourly momentum indicator though having a positive crossover is showing signs of negative divergence which should not be underestimated. Overall, the short-term outlook is positive, however considering the sharp run-up since last three trading sessions we should have a cautious stance and be prepared for a correction. In terms of levels, 20050 – 20000 is the crucial support zone while 20200 – 20250 shall act as an immediate hurdle zone.

Bank Nifty has also been trading with a positive bias. It has now reached the zone of 46370 – 46400 where resistance in the form of weekly upper Bollinger band and the previous swing high is placed. Thus, after rallying for three weeks there is high probability of a consolidation. Crucial support is placed in the range 45970 – 45670 and crucial resistance is placed at 46300 - 46400

Besides firm global market cues, investors are anticipating a halt in rate hike by the US Federal Reserve in the next week's policy meeting amid moderating inflation, which would augur well for local markets already witnessing a strong upsurge. A status quo on rate hikes would further bolster investors' sentiment as this would give a further leg up to the economy on hopes of softening interest rate stance going ahead.

A drop in US treasury yields have resulted in a recovery in world equity markets and also had a rub-off effect on local markets. On daily and weekly charts, the Nifty has formed a breakout continuation formation which is indicating that the uptrend wave is likely to continue in the near future. Although the larger texture of the market is bullish, the market is in temporary overbought conditions, and hence we could see some profit booking at higher levels. For short term traders, 20075 and 20000 would act as key support zones while 20300-20375 could act as crucial resistance areas for the bulls.

Markets extended up move after a day of pause and gained nearly half a percent. On the benchmark front, Nifty opened with an uptick and traded range bound thereafter. It finally settled at 20,192.35 levels; up by 0.44%. Meanwhile, the trend was mixed on the sectoral front wherein auto and IT posted strong gains while realty and FMCG ended in the red. The broader indices too were aligned with the move and gained nearly half a percent each.

We expect a positive tone to continue in the Nifty, with some intermediate consolidation citing a hurdle at 20,300 levels. Participants should maintain a “buy on dips” approach and look for stocks offering a favorable risk to reward ratio.

The market is inching towards a new direction with renewed buying in auto and IT stocks in expectation of strong festive demand and a strong deal wins.

Better-than-expected economic data from China and stimulus hopes further added optimism in global markets. The ECB hinted at a potential pause in rates due to receding inflation, while investors are now focused on central bank meetings next week, with the US FED, BoE, and BoJ set to announce their rate decisions.

The Indian rupee traded in the narrow range amid dollar inflows from the FTSE rebalancing while the nationalised bank bought the dollar on behalf of oil importers. Spot USDINR is expected to consolidate between 82.70 to 83.15 before next week’s three major central banks’ (FOMC, BoE, BoJ) policy decisions. The dovish ECB hike and another round of strong US activity data sent the dollar index (DXY) on another rally above 105.

The dollar may correct a bit lower in the near term, but the risks remain skewed towards further strengthening, or at least until the US activity picture starts to show some cracks.

Indian rupee ended 15 paise lower at 83.18 per dollar on Friday versus Thursday's close of 83.03.

Benchmark indices ended higher on September 15 with Nifty finished near 20,200.

At close, the Sensex was up 319.63 points or 0.47 percent at 67,838.63, and the Nifty was up 89.20 points or 0.44 percent at 20,192.30. About 1872 shares advanced, 1649 shares declined, and 145 shares unchanged.

Biggest gainers were Bajaj Auto, Grasim Industries, M&M, Hero MotoCorp and Bharti Airtel, while losers included BPCL, Asian Paints, HUL, Jio Financial and Tata Consumer Products.

Mixed trend saw among the sectors, with FMCG, oil & gas, power and realty down 0.4-1 percent, while auto, bank, pharma, information technology up 0.3-1 percent.

The BSE midcap and Smallcap indices ended on a positive note.

-Reduce rating, target at Rs 1,210 per share
-Media reports indicate co has announced a new organization structure
-Changes are substantial and can lead to exit of a few leaders
-New structure is geo vertical based & consolidates delivery with the new COO
-New structure brings in clear responsibilities for sales & delivery
-New structure improves economics of delivery, allows innovation within service lines
-Trades at full valuation of 19x FY25 EPS

Crude oil prices are set for third weekly gain in a row as WTI October is up 0.5% to trade at $90.55/b on Friday and gaining close to 4% for the week. The OPEC+ combined cuts along with voluntary cuts from Saudi Arabia and Russia is gradually brining the global crude oil market balance towards deficit of around 1.5-2mbpd by Q4. If the recent measures taken up by Beijing from reducing taxes to mortgage rate and slashing the RRR could bring the Chinese economy on recovery path in Q4-23, we are expecting WTI prices to trade above $100 by end of the year.

The macro numbers from China and US were encouraging for the industrial metals demand. China’s industrial output grew at 4.5% in August and retail sales at 4.6%. Oil refinery processing rose to a record 64.69 million tonnes in August, up 19.6% from a year earlier and equal to 15.23 million barrels per day.

Dollar index is heading for 9th straight weekly gains as DXY hits fresh six-month high of 105.43 on back of strong retail sales growing at 0.6%, and weekly jobless claims dropping to 220K data from US on Thursday.

Remain bullish on crude oil prices for medium to long term as stronger demand outlook from a robust Chinese industrial sector along with the OPEC+ production to keep market very tight in Q4-2023. WTI October remain supported around $88 and resistance remains around $92 for the day.

-Reduce rating, target at Rs 120 per share
-In current windfall tax regime, GAIL is a better proxy to rising oil prices
-However, believe benefits to GAIL are limited
-Higher prices should enable LPG segment to recover to profits, but remain weak
-PE remains in downcycle with GAIL reporting EBIT loss in last four quarters