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Last Updated : Mar 09, 2020 09:14 AM IST | Source: Moneycontrol.com

Market Headstart: Nifty likely to consolidate around 10,800; JSW Steel, Coal India top buys

Trends on SGX Nifty indicate a muted opening for the index in India. The Nifty futures were trading flat at 10,846 on the Singaporean Exchange around 07:20 hours IST, down 292 points.

The Nifty50 is likely to consolidate around 10,800 on March 9 tracking muted trends in other Asian markets, thanks to the steep fall in crude oil prices.

On March 9, Oil prices fell the most since 1991 after Saudi Arabia started a price war with Russia by slashing its selling prices and pledging to unleash its pent-up supply onto a market reeling from falling demand because of the coronavirus outbreak, said a Reuters report.

US stocks fell on Friday as fears of economic damage from the spread of the coronavirus intensified, though Wall Street’s major indeces ended well above their session lows.

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Trends on SGX Nifty indicate a muted opening for the index in India. The Nifty futures were trading flat at 10,846 on the Singaporean Exchange at around 07:20 hours IST, down 292 points.

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The S&P 500 posted its 10th decline in 12 sessions as moves to contain the virus crippled supply chains and prompted a sharp cut to global economic growth forecasts for 2020, said a Reuters report.

Indian markets witnessed a massive sell-off which pushed the benchmark indices below crucial support levels. The S&P BSE Sensex broke below 38000 while the Nifty50 closed below 11000 levels but the big carnage was seen in small & midcaps space.

The S&P BSE Sensex fell 1.92 percent while the Nifty50 saw a decline of 1.89 percent for the week ended March 6. Broader market underperformed as the S&P BSE Smallcap index plunged 2.7 percent followed by the S&P BSE Midcap index which was down 2.55 percent in the same period, data showed.

Indian markets remained volatile due to both global and domestic factors. On the global front spread of Coronavirus had led to a risk-off sentiment among investors across the globe, and on the domestic front, the announcement of a moratorium on Yes Bank weighed on sentiment.

Investors’ lost nearly 2 lakh crore in the week gone by. The average market capitalisation of the BSE-listed companies fell from Rs 146.87 lakh cr recorded on February 28 to Rs 144.31 lakh cr on March 6.

Gold prices extended gains for the fifth consecutive day to touch a new lifetime high of Rs 44,415 per 10 gram in the Mumbai bullion market on safe-haven appeal as the spread of coronavirus weighed on the forecast for global economic recovery.

Oil prices tanked more than 7 percent on Friday to their lowest levels since mid-2017 after Reuters reported that Russia balked at OPEC's proposed steep production cuts to stabilize prices, said a Reuters report.

The Indian rupee resumed its downward journey after a day's hiatus on Friday, plummeting by 46 paise to 73.79 (provisional) against the US dollar as coronavirus-panicked investors kept assessing deteriorating financial markets.

On the institutional front, FPIs were net sellers in Indian markets for Rs 3594 cr while the DIIs were net buyers to the tune of Rs 2543 cr, provisional data showed.

Big News:

Snapping their six-month buying streak, FPIs pulled out a net Rs 13,157 crore from the Indian capital markets in the first five trading sessions of March as the coronavirus outbreak spooked investor sentiment.

According to depositories data, foreign portfolio investors (FPIs) withdrew a net Rs 8,997.46 crore from equities and Rs 4,159.66 crore from the debt segment during March 2-6, taking the total net outflow to Rs 13,157.12 crore.

Prior to this, FPIs were net buyers in the Indian capital markets for six consecutive months since September 2019.

The US Fed brought in an emergency rate cut of 50 bps, which shows that the US government is expecting a slowdown, he noted.

Experts feel that in the next 3-4 weeks, the coronavirus behaviour in the western world will dictate the investment behaviour by FPIs in India.

Technical View:

Nifty formed a Hammer like candle on the daily charts which suggest that a bottom could be in place

It formed a bearish candle on the weekly charts

The index closed below its crucial support of 100-EMA and rising trend line on a weekly scale, which doesn’t bode well for the bulls.

Resistances are gradually shifting lower and now 11250 and 11433 levels would be an immediate hurdle to be with the bearish trend.

The support levels are placed at 10800 and then 10650 zone.

Till the time, volatility doesn’t cool down and price doesn’t settle with any sign of a reversal in data; traders shall avoid bottom fishing as it is harmful to ‘catch a falling knife’.

Three levels: 10827-10800, 11035, 11250

Max Call OI: 12000, 11500

Max Put OI: 11000, 10500

Stocks in the news:

A Mumbai court on March 8 ordered police custody for former Yes Bank MD and CEO Rana Kapoor till March 11.

The government on March 7 has invited bids for the sale of its entire 52.98 percent stake in Bharat Petroleum Corporation (BPCL).

Tata Steel and JSW Steel have raised the price of steel between Rs 500 and Rs 800 a tonne in the wake of higher input costs and shortage in the international markets as coronavirus have hit China's steel production.

Technical Recommendations:

We spoke to Narnolia Financial Advisors Ltd and here's what they have to recommend:

JSW Steel: Buy Around Rs 225 | Target: Rs 275 | Stop Loss: Rs 190 | Upside: 22 percent

Mahanagar Gas: Buy Around Rs 970 | Target: Rs 1,120 | Stop Loss: Rs 900 | Upside: 15 percent

Coal India: Buy Around Rs 168 | Target: Rs 188 | Stop Loss: Rs 154 | Upside: 11 percent

Disclaimer: The views and investment tips expressed by investment expert 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.
First Published on Mar 9, 2020 08:47 am
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