Nifty may see some selling post stricter curbs

The recent strength in the stock market could face a bump in the wake of the Maharashtra government’s decision on Sunday to bring in stricter curbs to contain the spread of coronavirus. Analysts expect a weak opening on Monday as a big chunk of the surge in coronavirus cases in the country has been coming from the state but losses could be limited unless other states follow suit on the lockdown. “This was anticipated as cases have been rising over some time, and it is a partial lockdown… so the services sector may be impacted to a certain extent. Some kneejerk reaction can happen on Monday, but it won’t have much downside impact,” said Piyush Garg, CIO, ICICI Securities. Last week, Jefferies’ chief global strategist, Christopher Wood, had said Indian stocks are not priced in for renewed lockdowns. JP Morgan too had warned in a note that the government may be forced to impose lockdowns if the number of cases continues to rise sharply. Stock indices gained 2.5% in a holiday-truncated week. The Nifty ended up 176.65 points or 1.2% at 14,867.35 on Friday. Technical analysts expect the Nifty to see immediate support at 14,500 and 14,600 and resistance between 15,000 and 15,300 levels.


Will the Nifty be able to extend gains?

The Nifty has formed a Bullish candle with a long lower shadow indicating buying was seen on declines. Cooling of the Volatility Index (VIX) below 20 zones indicates the base of the market is shifting higher for the next leg of the rally. Option data suggest a shift in higher trading range between 14,500 and 15,200. Now, the Nifty has to hold above 14,800 to commence the next leg of the rally and an up-move towards 15,100 and 15,350 zones; while on the downside support exists at 14,700 and 14,600 levels.

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What should investors do?
Investors should continue to remain bullish as the market is set for the next leg of the rally if it holds above key hurdle areas. Positive momentum could continue in metals and IT stocks; while a short-term bottom is already in place in banking, financial and FMCG stocks. Stockwise, positive setup is seen in Hindalco, SAIL, Tata Steel, JSW Steel, ICICI Bank, Lal PathLabs, ITC, Infosys and Tata Chemicals.



Indices gained 2.5% last week. Will this trend continue?

In the short-term, major support for the Nifty is placed at 14,260-14,300. While the “Double Top” pattern on daily chart remains void. Sustenance above the cluster of 20 & 50 DMAs shall be nearterm positive. Its key support and resistance are placed at 14,570 and 15,050/15,335, respectively.

What should investors do?
There is still no striking sign that the past occurrences of higher volatility range cannot take place in near term as the key intermarket triggers — DXY (dollar index) has consolidated near the 200-day moving average and US 10-year (treasury yield) remains near the intermediate highs. Strict risk management is advised. Among the stocks, expect bullish bias in Sun Pharma, TVS Motor and Bosch


Indian share indices gained 2.5% last week. Will this trend continue?
A rebound in the Nifty has helped the index to close above the key 50-DMA. Now unless we settle above 14,950, the index could consolidate and trade in the range of 14,400-14,950. In case we close above 14,950, the Nifty can easily move towards 15,250. One thing to watch out for this week will be the Covid situation in India as the second wave is frightening and in case of very strict restrictions in major cities markets can see a brief spell of profit taking.

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What should investors do?
Ahead of the fourth-quarter results season, we have been recommending the IT basket (Infosys, HCL Technologies, TCS, Tech Mahindra, Mindtree, LTI and NIIT) as we expect the results to surprise again all over— higher guidance, better-than-expected margins and upbeat outlook. In defensives, we continue to remain bullish on FMCG stocks (Hindustan Unilever, Asian Paints, Dabur and Tata Consumer). Within metals — Vedanta is my preferred bet as key holders will continue to hold sizeable position even after open offer price of Rs 235 as fair value is expected to be around Rs 320/ share. In the near term, autos and PSU banks will continue to underperform the Nifty.

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