TCS with a revenue miss and margins higher could open slightly lower on Monday since the narrative is not very pleasant.
Q. It has been a great week for Indian markets with Sensex climbing above Mount 42K and Nifty hitting fresh record highs closer to 12,400 levels? Do you think the momentum should hold in the coming week as well?
A. Post the stupendous rally with Sensex and Nifty hovering around new highs, it seems that Mr Market will take a breather in large-caps but mid and small-caps will continue to rise.
Foreign institutional investors (FIIs) have made comparatively lower infusions in the month of January which indicates their weakening convictions for the Indian markets.
Given rich valuations in large-cap space, the expectation of a larger fiscal deficit and other inflationary tendencies, FIIs have turned cautious which might bring about a pause in the larger market caps.
However, volatility will be high since the result season is fast picking pace and speculation is rife from the upcoming Budget 2020.Q. Record highs in the US market is something that might fuel optimism on the Street. Back home, the market is building expectations for some of the measures that can be announced in Budget 2020. What is your view in terms of factors driving the rally which looks broad-based compared to what we saw in 2019?
A. The Nifty is currently at all-time highs. In such circumstances, small and mid-caps are trading 20 percent below their lifetime highs. Such a huge divergence will cause broader indices to pick up the pace.
Global liquidity, cool down in the geopolitical situation, fresh hopes from Budget 2020 will drive the broader markets. And the fact that the Government has already announced major steps in the past three months built confidence in the market.Q. What is your advice to investors in the run-up to the Budget? Is wise to lighten positions as the reversal could happen anytime? What are the major support and resistance levels which one should watch out for? Do you think we could be in the final leg of the upwards move (short term)?
A. Investors can lighten up their trading portfolios and hold the core long-term quality stocks. Profit booking can be performed in cyclical.
The level of 12,200 level on the Nifty is good support for booking profits on your trading books and the cyclical part of investment stocks can also be churned.
The bigger bull market is still unfolding in India but it will come in subsets. There is every likelihood that around the Budget one subset should mature and thereafter a correction can be expected. Historically we see three or four subsets in a bull market.Q. Any three stocks which look promising breakout buys for the coming week? Please mention the target and stop loss for the same?
A. Promising breakout buys for the coming week could be –
Torrent Pharma, which can be bought with a target of Rs 2,112, and a stop loss could be placed below Rs 1,953. Nestle India is also a buy with a target of Rs 15,800, and a stop loss could be placed below Rs 15,230. Finally, ICICI Bank from the banking space is a good buy with a target of Rs 550, and a stop loss could be placed below Rs 525.Q. A brief outlook on TCS, RIL and HCL Tech which will be out on January 17?
A. TCS with a revenue miss and margins higher could open slightly lower on January 20 since the narrative is not very pleasant.
The levels of Rs 2,300 is likely to pose as strong resistance while Rs 2,195 could be good support levels for this stock. As long as it remains below the resistance levels, it will remain in a sideways category.
HCL Tech delivered strong numbers and is currently in an overbought zone. The level of Rs 580 would be a good support level for the stock with a 10 percent upside. In relative strength, HCL Tech is a better bet than its large-cap peers.
For RIL, the level of Rs 1,620 could be strong resistance. Reliance is currently in a consolidation phase and a breakout above 1,620 will bring about the fresh rally of about 5 percent otherwise it will continue to remain sideways.
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