Street signs: Nifty slips below 100-DMA, small IT stocks soar and more

Nifty slips below 100-DMA
 
The market trend is likely to remain weak as the benchmark Nifty50 index has slipped below its 100-day moving average (DMA). The index on Friday closed at 14,341 slightly below the 100-DMA of 14,374 (simple moving average). In the recent past, too, the index had slipped below its 100-DMA but has managed to snap back. If the index once again manages to rebound from its “extremely crucial” level, the correction can be shallow. Otherwise, the index can head towards its 200-DMA. “Given the near-term challenges and sentiment, we can expect foreign flows to remain subdued in the short term. On the downside, the Nifty has major supports at 13,600 and 13,000, around its 200-DMA,” says Rusmik Oza, executive vice-president at Kotak Securities.      

               
Small-sized IT stocks soar
 

Analysts are bullish on small and mid-sized IT companies despite the downturn in the market. They believe some of the large orders to the large-sized firms will spill over to the smaller players. Also, they see other tailwinds, such as consolidation in the industry and lower costs, as most staffers shift to the work-from-home model. Stocks, such as Intellect Design, Happiest Minds, and Sonata Software, have rallied more than 50 per cent in the past two months. “Investors can keep an eye on small-sized firms with good order log and potential acquisition targets,” says an analyst.               

               
No change in TDS on dividends
 
Mutual fund industry body Amfi has clarified that there will be no changes with respect to tax deducted at source on dividends, which will continue to be deducted on the entire sum distributed (both income distribution and capital distribution), as done at present. Currently, dividends distributed by a mutual fund are taxable in the hands of investors as per applicable tax rates. "There is no further guidance available on the impact, if any, of the revised disclosures on taxation in the hands of investors. Investors should consult with their tax advisors for any further questions related to tax," Amfi said in a recent update put up on its website.