Nifty likely to consolidate around 12,200; AU Small Finance, Sobha top buys

 

The Nifty50 is likely to consolidate around its crucial support of 12,200 levels amid muted trend seen in other Asian markets.

The fall on January 20 could largely be attributed to correction in four index heavyweights viz Reliance, TCS, Kotak Bank and HDFC Bank.

India VIX moved up by 9.06 percent to 15.41 levels. D-Street seems to be witnessing spike in volatility due to ongoing result season and upcoming Union Budget 2020.

The 30-share pack Sensex hit a fresh all-time high of 42,273.87 but failed to hold altitude and ended the day with a loss of 416 points, or 0.99 percent, at 41,528.91.

Nifty also hit a fresh record high of 12,430.50 in early trade but settled 128 points, or 1.03 percent, down at 12,224.55.

Sensex saw the biggest intraday fall in five months while for Nifty it was the biggest intraday fall in 3 months.

On the macro front, the International Monetary Fund has slashed its estimate on India’s 2019 economic growth to 4.8 percent from the 6.1 percent expansion it projected in October, citing a sharper-than-expected slowdown in local demand and stress in the non-bank financial sector.

The rupee slipped 3 paise to close at 71.11 against the US dollar on January 20, tracking a steady rise in crude oil prices and weakness in domestic equities.

On the institutional front, FPIs were net buyers marginally for Rs 5 cr while the DIIs were net sellers in the Indian equity markets for Rs 1,419 cr, provisional data showed.

Big News:

As many as 26 companies on the BSE will report their December quarter results that include names like Granules India, Havells India, ZEE Entertainment, Polycab India, etc. among others.

Havells India: PAT likely to stay flat YoY with a positive bias

ZEE Entertainment: PAT likely to fall 19 percent YoY to Rs 424 cr

(All estimates are from Motilal Oswal)

Technical View:

Nifty witnessed strong resistance from the upper band of the channel on the weekly chart and witnessed a selloff, forming a bearish engulfing candle pattern on the daily chart which is again bearish reversal candle by nature.

“If the index manages to sustain below 12,210, we may some more cuts in it. Immediate support for Nifty is coming near 12,155-12,100 zone and resistance is coming near 12,280-12,350 zone. As long as Nifty trades below 12,400 zone, we may see profit-booking on every rise in the index,” said Rohit Singre, Senior Technical Analyst at LKP Securities.

Three levels to track on Tuesday: 12216, 12300, 12430

Max Call OI: 12500, 12400

Max Put OI: 12000, 12200

Stocks in the news:

Airline stocks could be in focus after the aviation regulator DGCA on January 20 said domestic air passenger traffic grew to 14.41 crore in 2019, an increase of just 3.74 percent compared to 2018.

Telecom companies Vodafone Idea, Bharti Airtel and Tata Teleservices, have filed a modification petition with the Supreme Court on January 20, seeking an extension to the January 23 deadline to pay dues in connection with its Adjusted Gross Revenue (AGR) verdict.

ICICI Securities, the investment services arm of ICICI Group, on Monday reported a 36 per cent rise in consolidated profit to Rs 137 crore for the third quarter of 2019-20.

Technical Recommendations:

We spoke to HDFC Securities and here’s what they have to recommend:

Jubilant Life Sciences | Buy | LTP: Rs 608.50 | Target: Rs 670 | Stop loss: Rs 570 | Upside: 10%

AU Small Finance Bank | Buy | LTP: Rs 888.95 | Target: Rs 960 | Stop loss: Rs 840 | Upside: 8%

Sobha | Buy | LTP: Rs 451.65 | Target: Rs 490 | Stop loss: Rs 422 | Upside: 8.49%

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