Beaten down stocks could see double digit gains till elections

What a day for Indian markets as Nifty50 climbed 11,000 levels for the first time since February 2019, but experts feel that it might be too early to call this as a pre-election rally.

The Nifty closed above its crucial 200-days moving average (DMA) placed at 10865 for the second consecutive day in a row. Supertrend indicator also gave a buy signal on the daily charts.

The final tally on D-Street – the S&P BSE Sensex closed 193 points higher at 36,636 while the Nifty50 ended 65 points up at 11053.

The S&P BSE Small-cap index outperformed as it rose by nearly 1 percent compared to 0.53 percent rise in the Sensex, and 0.6 percent gain seen in the Nifty50.

Barring Auto which ended marginally lower, strong buying was witnessed across all the other sectors such as Consumer Durables, Power, Oil & Gas, Metals & Realty which rose 0.7-1.4% respectively.

The strong upswing seen in the broader market suggests that the rally is broad-based and the bulls are here to stay. But, can we say that this is a pre-election rally which usually sees high beta names getting a lot of attention?

Vishal Malkan, Founder Malkans View in a podcast with Moneycontrol said that ‘It might be early to say that the pre-election rally has started but one thing is certain that March expiry will be better than February.

Commenting on high beta names, Malkan said we have already seen stock specific action on D-Street in which some of the stocks have already registered double-digit gains especially those which were beaten down in the last 6-8 months and the trend is likely to continue till the election. However, timing your trade will be important.

Stocks in news

The share of housing finance company Dewan Housing Finance Corporation (DHFL) zoomed 11 percent after an independent review report released by the company reported that it has not promoted any of the 26 shell companies, which were alleged to have siphoned off about Rs 35,000 crore of the company by investigative news portal Cobrapost.

Endurance Technologies shares plunged 9% after offer for sale by the promoter opened for subscription.

Wipro shares rallied 2 percent after the stock adjusted for bonus issue which means it started trading ex-bonus.

Edelweiss Financial Services shares closed 6 percent higher after North American fund manager CDPQ signed a deal to invest USD 250 mn in the company’s NBFC subsidiary.

Global Updates

European markets are trading mixed on Wednesday as market players keenly watching the developments from US-China trade talks.

Asian markets ended on a mixed note with Shanghai Composite added 1.57 percent to close at 3,102.10, while Nikkei was down 0.6 percent to close at 21,596.81.

Hang Seng added 0.17 percent to close at 29037.60, while Kospi shed 0.17 percent to close at 2,175.60.