Street signs: IT results to drive Nifty, HNIs move to hybrid funds & more

The market direction in the coming week will be dictated by the Q3 results of domestic IT companies as well as release of macroeconomic data, analysts said

IT results, Omicron to drive Nifty 

Nifty logged the best week in four months, rising 2.6 per cent last week. The index has formed a long legged doji with a slightly upward bias, according to analysts. Volume pick-up and positive advance-decline ratio augur well for the near term, with index likely to oscillate in the range of 17,944-17,655. The market direction in the coming week will be dictated by the Q3 results of domestic IT companies as well as release of macroeconomic data, including inflation numbers for December and manufacturing and industrial production data for November, analysts said. Rising Omicron numbers may add to the volatility.

Paints may gain on higher prices

Paint stocks are likely to benefit from the rise in prices and gain in market share from smaller players. Analysts said that paint companies have hiked prices by 22-25 per cent in the last 12-odd months, and still volumes have remained in the low double digits due to higher demand. Moreover, anti-fungal and anti-bacterial paints are doing well compared to last year due to rising awareness for hygiene and higher investments by paint companies. “With an increase in input prices, the paint companies have also raised trade schemes. Hence, there is a higher incentive for the dealers to buy and push the paints of organised paint companies,” said ICICI Securities in a note. Asian Paints, Kansai Nerolac, Indigo Paints, and Akzo Nobel are seen as beneficiaries. 

HNIs move to hybrid funds 

Quantitative research analysts are suggesting traders to go short on Bajaj Auto and simultaneously build a long position on Wipro to benefit from the impending Sensex rebalancing. According to analysts, the two-wheeler manufacturer will be replaced by the software exporter in the 30-share index. One analyst said the trade will remain active till the time of announcement, which is expected this week. Wipro’s Sensex inclusion is expected to result in passive inflows of $150 million, while the exclusion could lead to selling worth $75 million in Bajaj Auto, as per an analysis by Abhilash Pagaria of Edelweiss Alternative Research.