INSUBCONTINENT EXCLUSIVE:
The week gone by began with a bang and on a positive note, with the Nifty50 showing signs of hope after the massive carnage in the previous
Everyone had a consensus view that Nifty will break the 10,000 level on the back of continued FII selling and short rollovers in the new
series.
But markets are unpredictable, and seldom follow consensus
When everything turns negative, that is exactly when the market reverses
The mid-week rift between RBI and the government created extremely bearish narratives, but if Mr Market wants to rise, nothing can stop it
Indian indices were so deeply oversold that they had to rise
The rally should continue for some more time
However, it could prove to be a dead-cat bounce
But let’s wait for further evidence.
One of the barometers to measure the health of an economy is auto sales
In the past few months, the numbers have not been encouraging, which shows feeble health of the economy
Such muted growth could have been due to increasing fuel prices, inflationary tendencies or decreasing purchasing power
Whatever may be the reason, this is not good for the stock market.
Events of the weekWhile the second quarter earnings season is entering
its last leg, some companies have done extremely well
Century Textiles reported a 114 per cent increase in bottomline and Tata Power delivered 85 per cent PAT growth whereas certain companies
have faced a hard time as the macros cast a shadow over their margins
BPCL is one of them, having delivered 48 per cent degrowth in PAT compared with that in the previous year
Dabur reported flattish PAT growth at just 4 per cent
Overall, the results were a mix bag last week.
Technical OutlookThe Nifty indeed took support at 10,000 and swiftly bounced back from the
Such sharp upward moves will be followed by intermittent pullbacks
The market can reasonably be expected to touch the 10,650 level, which is the 38 per cent retracement, and 10,850 level, which is the 50 per
cent retracement.
For traders, buy-on-dips should be the strategy
At the same time, they should avoid stocks that have run up sharply after the quarterly earnings
Expectations for the WeekThe festive euphoria may keep the market elevated, but there are fewer confirmations as of now that the Nifty will
touch new highs before the end of this calendar
Nonetheless, the indices have seen a good correction and many stocks are available at cheaper valuations
It seems to be the right time to cherry-pick the market leaders across sectors, as they will glide through the political tide with fewer
headwinds.
HDFC Bank, Bajaj Finance and HDFC Life are three names in the financial services space whereas TCS and Biocon could be momentum
A government booster to infrastructure will bode well for Asian Paints.
Consumer durables and FMCG players such as Hindustan Unilever and
Avenue Supermarts would be safer bets to maintain sufficient portfolio diversification
Auto and chemicals leaders Maruti and Pidilite can also be good picks from a one-year perspective.
We recommend investing a part of liquid
assets in these 10 stocks at least with one-year perspective till next Diwali.
Nifty50 ended this week 5.21 per cent higher at 10,553
Wishing everyone a Happy Diwali and a Prosperous New Year.
