By Rajesh Agarwal AUM Capital
Benchmarks ended lower as traders worldwide braced for tighter liquidity following US Federal Reserve chairman Jerome Powell’s hawkish comments on rate hikes. The market breadth was in favour of declines with one stock advancing against every two declining ones.
In the domestic market, economic growth recovered to a five-quarter high of 7.2 percent during October-December, backed by strong manufacturing and investment activity as the disruption caused by the goods and services tax (GST) bottomed out.
Housing & Auto Stocks: Home and auto loans are set to get costlier as banks increase their benchmark lending rates. State Bank of India (SBI), Punjab National Bank (PNB) and ICICI Bank Ltd all increased their marginal cost of funds-based lending rate (MCLR) by 10-20 basis points.
After the MCLR system came into effect in April 2016, this is the first time banks have increased the benchmark lending rate, signaling a turn in the interest rate cycle.
Technical Outlook
Nifty has formed two consecutive 'Doji' candlestick pattern on daily scale indicating indecisiveness at current level. It is hovering around 100 SMA of 10,440 levels. A congestion area has developed and the Nifty is seen oscillating in a capped range of 10380-10630 levels.
If it sustains below 10380, then weakness could continue till 10,100 marks, while on the upside, hurdles are seen at 10,630 marks. Moreover, RSI (14) has given a negative crossover.
Nifty Bank has formed 'Inverted Hammer' candlestick pattern around its major moving average of 200 DMA of 24730 levels on daily scale. Any significant breach below this level may drag Index further lower till 24450 marks which might work as strong support zone.
Moreover, negative crossover in two moving averages of 20 EMA & 100 SMA. Furthermore, RSI (14) has given negative crossover. We are expecting Nifty Bank to trade within a broader range of 24700-25900 levels in near term.
Below are the top stocks which can return up to 17%
Dabur India | Rating: Buy | Target: Rs 335, stop loss: Rs 317 | Return 3%
Hero MotoCorp | Rating: Buy | Target: Rs 3645, stop loss: Rs 3520 | Return 1%
IDBI Bank | Rating: Buy | Target: Rs 87, stop loss: Rs 75 | Return 17%
Steel Authority of India | Rating: Sell | Target: Rs 75, stop loss: Rs 85
HDIL | Rating: Sell | Target: Rs 43, stop loss: Rs 51
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