Profit booking, not Fitch Rating, pricked rally baloon; IndiGo top bet in aviation

Led by declines in Reliance Industries, HDFC Bank, SBI, Kotak Mahindra Bank and Maruti Suzuki, the Sensex snapped its eight-day winning streak on March 22. On a weekly basis, Nifty50 closed marginally in green while the Sensex rose 0.37 percent.

The big winner of the week is NiftyBank, which rose 0.68 percent for the week ended March 22. However, the index reversed gains after hitting a high above 30,000 for the first time at 30,008.10. The index closed 249 points lower at 29,582.

The S&P BSE Mid-cap index slipped 0.59 percent on Friday while the S&P BSE Small-cap index was down by 0.44 percent.

Investors preferred to take profits ahead of the weekend and considering the fact that March F&O expiry is due in the coming week, some bit of volatility cannot be ruled out.

Fitch Ratings slashed India’s economic growth forecast for the next financial year starting April 1, to 6.8 percent from its previous estimate of 7 percent was certainly a mood dampener for D-Street but analysts feel that it is a quick round of profit taking.

“After rallying by about 1,000 points since February 19 some bit consolidation on Nifty was on cards. The fall in the index was led by two performing sectors namely banks, and oil & gas. A consolidation of 200-300 points is good for D-Street,” Shailendra Kumar, Chief Investment Officer at Narnolia Financial Advisors, told .

Coming to the Fitch forecast for India, Kumar said that yes to a certain extent the broader number for India was something negative but just two days back Fitch reduced the global growth forecast from 3.1% to 2.8%. So, a cut in India’s growth forecast was something there on the cards.

Airline sector which has been abuzz with news of consolidation which caught investors attention. SpiceJet rallied 7 percent while InterGlobe Aviation also closed in the green on Friday.

February data showed that Indigo retained its top position with a market share of 43.4 percent, carrying 4.93 million passengers in February while Spicejet flew more passengers at 1.55 million and had a market share of 13.7 percent.

Kumar said that if investors are looking at Aviation sectors then Indigo is the top bet. “Aviation is looking very interesting. In the last three years, passenger traffic has doubled to 1.2 crore. The only company which we like is InterGlobe Aviation because of a strong balance sheet and operational efficiency,” added Kumar.

Stocks in news

GVK Power & Infrastructure gained more than 3 percent after the GVK Group increased its stake in Mumbai International Airport (MIAL).

Jubilant Life Sciences slipped 3 percent after the US Food and Drug Administration classified the company’s Nanjangud unit as Official Action Indicated.

Kansai Nerolac Paints shares fell 2 percent after global brokerage house CLSA downgraded the stock to sell from underperform.

Oil-to-telecom major Reliance Industries retained its tag of ‘largest listed firm’ in India as the company hit $ 127 billion in market cap on March 20 intraday trade amid strong market condition.

Global Update

European markets are trading higher in Friday’s session on the back of dovish comment from the US Federal Reserve.

On the other hand, most of the Asian markets ended with little change with Shanghai Composite up marginally at 3,104.15 while Hang Seng closed 0.14 percent higher at 29,113.36.

Nikkei ended 18 points higher at 21,627.34 and Kospi ended slightly higher at 2,186.95.

(Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.)