NEW DELHI: Buying continued on Dalal Street on Tuesday as encouraging macro data gave hopes to investors that any negative news from central banks will be absorbed by the market momentum.
The retail and DII enthusiasm is getting fundamental support from positive economic data like record GST collections, PMI at 55.9 and better than expected Q2 results. An important event that can influence financial markets globally is the FOMC meet starting today, said an analyst.
“The Fed is widely expected to announce tapering its bond-buying program starting this month. More important than the tapering announcement, which is already discounted by markets, will be the Fed’s response to inflation and the likely cues on rate hikes. If indications of an earlier than expected rate hike comes from the FOMC meet, that can be negative for markets. Otherwise, markets may continue to be resilient,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
How are bluechips doing
After opening in the green, benchmark indices pared gains. At 9.31 am, BSE flagship Sensex was up 78 points or 0.13 per cent to 60,216. NSE benchmark Nifty advanced 41 points or 0.23 per cent to 17,970.
“The index has opened on a lethargic note but it is a positive sign that it is above 17,900. That is a crucial level to keep in mind. As long as it keeps above this there is always a possibility for positive momentum to build in and take the Nifty higher. A base has been formed around 17,550-17,600 but if that were to break, we could slide down to 17,200,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
In the 50-share pack Nifty, Tata Motors was the biggest gainer, up 2.93 per cent. Maruti Suzuki, NTPC, Bajaj Finance, Titan, HDFC Life Insurance, Adani Ports and Power Grid were among other gainers.
Sun Pharma was the top loser in the pack, down 2.15 per cent. Tata Steel, Hindalco, HCL Tech, JSW Steel, Cipla, Dr Reddy’s Labs, ONGC and Indian Oil were among other stocks that traded in the red.
Factors driving markets
RBA meeting: The Australian central bank will meet to decide its policy rates on Tuesday. A drop of the RBA’s key policy measure, targeting ultra-low short-term rates would signal a change to the bank’s dovish stance and could be a preamble to the Fed’s meeting that markets expect will mark the start of its bond-buying tapering.
Raw material crunch: US manufacturing activity slowed in October, with all industries reporting record-long lead times for raw materials, indicating that stretched supply chains continued to constrain economic activity early in the fourth quarter.
Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.66 per cent while Nifty Midcap advanced 0.80 per cent. The broadest index on NSE, Nifty 500 was up 0.46 per cent.
KPIT Tech, Kalyan Jewellers India, BASF, Aditya Birla Capital, Tata Power and Fortis Healthcare were gainers from the space while Aarti Industries, Oil India, GSPL, Sequent Scientific, KEC International and Balaji Amines were under selling pressure.
ONGC, DMart among the 9 techno-funda picks this Diwali
Diwali Stocks
Diwali is associated with investment and buying certain things for the future. On this Diwali, there cannot be any better alternative than equities for long-term investments. In Samvat 2078, markets may not maintain the same pace and see some profit booking at higher levels. However, we expect the sector and stock-specific action to continue, said CapitalVia Global Research. “Capital goods, banks, power, chemicals and textiles could lead the next leg of the rally, in tandem with the growth impulses seen across the economy.” The investment advisor has suggested some techno funda picks for the upcoming Samvat. Have a look:
KPR Mills | Buy | Target Price: Rs 540 | Stop Loss: Rs 390
– Q2FY22 revenue at Rs 940.6 crore, up 71.83% from Rs 547.4 crore in Q1FY22.
– Q2FY22 net profit at Rs 168.10 crore against Rs 60.30 crore in Q2FY21.
– Currently, stock has formed a double bottom pattern on daily charts, which can lead to bullish momentum.
– Relative strength index (RSI) and stochastic are also confirming the bullish trend.
– The government has approved a pilot project for geotextiles involving the design or commissioning of technical personnel.
– Total liabilities decreased by 11.29% in FY-21 and assets growth increased by 12.70% FY-21.
– On the technical side, stock is moving towards the upper level of 20 average Bollinger bands.
Manappuram Finance | Buy | Target Price: Rs 250 | Stop Loss : Rs 155
– Manappuram has been continuously moving on a bullish trend since last month. This trend can break the all-time high of 213.
– RSI is hovering near the overbought position. Stochastic is also doing the same.
– Stock is trading near the upper band of 20 average Bollinger bands.
– Debt decreased at Rs 3.11 crore FY-21 against Rs 3.97 crore in FY-20
– The organised gold lending sector makes up only 35% of the entire gold loan industry. The largest company in the legal gold loan market is Muthoot Finance, followed by Manappuram Finance. Banks control 75% of the formal gold lending market.
Jammu Kashmir Bank | Buy | Target Price: Rs 60 | Stop Loss : Rs 22
– J&K Bank is forming a rounding bottom pattern in near term. 21 SMA also gave a crossover over a few days back, indicating a new high in the coming days.
– In the fiscal fourth quarter, Jammu & Kashmir Bank reported a consolidated net profit of Rs 3.22 billion ($43.4 million), up from a consolidated net loss of Rs 3.37 billion a year ago.
– ROE of J&K bank increased to 7.34 % FY-21 against -22.11% in FY-20.
– The shareholders of Jammu and Kashmir Bank have given their approval to raise up to Rs 2,000 crore in equity and debt to fund the lender’s operations. Shareholders approved a plan to raise up to Rs 1,000 crore in stock and loan capital at the company’s annual general meeting.
– The board of Jammu & Kashmir Bank will review the proposed capital infusion of up to Rs 5 billion ($67.9 million) by the Jammu & Kashmir government as promoter shareholder. This will help businesses expand on a greater scale.
– Stock is near to break the nearest resistance of 44. If it sustains above this level, it can show 53-65 level soon.
– RSI and stochastic also support the backend to push it up.
Kotak Mahindra Bank | Buy | Target Price: Rs 2,470 | Stop Loss : Rs 1,980
– Entered into a partnership with merchant commerce platform Pine Labs to expand merchant acquiring and point-of-sales services.
– Kotak Mahindra group acquires vehicle financing portfolio of Volkswagen Finance. It also acquired the non-performing assets portfolio of VWFPL.
– Kotak will gain access to over 30,000 customers with a total loan outstanding with VWFPL of around Rs 13.4 billion.
– Net profit has also been increasing gradually on an annual basis (from Rs 62 billion in 2017, to Rs 99.9 billion in 2020.
– In the current financial year, Kotak Bank is having a P/E ratio of 43 which is slightly high. But it is okay to maintain a high P/E ratio for well-performing organizations as individuals are willing to buy them even at higher prices.
– On technical charts, Kotak Bank is forming an “inside bar” candlestick pattern after a good breakout (supported by a decent impulse movement). As and when prices breach 2,200 on weekly charts, we may again witness a continued bullish momentum of 12%-13%.
Global markets
MSCI’s gauge of Asia-Pacific shares outside Japan recovered early losses to be 0.8 per cent higher at 0128 GMT, with Japan’s Nikkei edging 0.2 per cent lower and Australia’s S&P/ASX 200 down 0.6 per cent.
Chinese shares opened slightly lower, with local blue chips trading down 0.09 per cent, though the Hong Kong benchmark was up 1.8 per cent. South Korea’s KOSPI index opened 1.50 per cent higher.
Overnight, Wall Street advanced to record highs helped by gains for energy shares and Tesla.
