Street signs: Nifty50 may test 16,900 levels, switch makers to gain & more

Nifty50 may test 16,900 levels

Nifty slipped below the psychological 17,000-mark on Friday, logging its second-worst week in 10 months amid a ‘sell on rise’ sentiment among institutional investors. Analysts believe that 16,900 will act as an immediate and important support level for the index. Below this, the Nifty may head towards 16,700-16,400 levels. On the upside, 17,200-17,250 will act as a critical resistance zone at any pullback. Bank Nifty is also witnessing significant selling pressure and underperforming after it slipped below its 200-DMA. However, 35,500-35,000 is an immediate support zone, below which analysts expect further selling pressure. On the upside, the 36,500 level will act as a strong hurdle.

Tax saving demand for ELSS

Even as flows into the equity funds have remained strong in the last few months, equity-linked saving schemes (ELSS) have continued to see net outflows. ELSS is a type of mutual fund that allows investors to claim for the income tax deduction of Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961. However, as we approach the tax-saving season, the flows have started to turn positive for ELSS schemes. In November, ELSS schemes saw net inflows of Rs 174.29 crore — first time in this financial year. Fund houses are hopeful that in the next few months the flows would increase in ELSS schemes.

Switch, switchgear makers to gain

The stocks of switch and switchgear manufacturers are likely to gain in the coming months as a preference for safe products and stringent technical standards have led to the organised sector dominating these two segments in India. High inflation in commodity costs and supply chain disruptions are also likely to favour organised players. According to analysts, the switch and switchgear market is expected to reach the size of Rs 6,200 crore and Rs 28,600 crore, respectively, by FY23. “The switch market is growing at a steady CAGR of 9.2 per cent. It is expected to reach Rs 6,200 crore in FY23. The switchgear market, too, is growing at a steady CAGR of 9.3 per cent. The size of domestic switchgear industry was Rs 18,300 crore in FY18 and is expected to reach Rs 28,600 crore in FY23,” said a note by ICICI Securities. Havells, V Guard and Crompton Greaves are likely to benefit.