 "A man looks at a screen across a road displaying the Sensex on the facade of the Bombay Stock Exchange (BSE) building in Mumbai")
Markets gained ground on Monday, with the S&P BSE Sensex rallying over 400 points in intra-day deals. On the other hand, Nifty50 index, too, moved up nearly 1.5%, or over 120 points, to 7,856 levels.
Banking stocks were among the top gainers, as the Nifty Bank index surged over 2.2%. Among individual stocks, YES Bank, Canara Bank, ICICI Bank, Bank of Baroda, Federal Bank, HDFC Bank and Bank of India moved up 1.8% - 3.5% in intra-day deals.
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So how long will this up trend sustain and what are the key levels to watch out for as regards the frontline benchmark indices? Here is a quick compilation of what analysts at leading brokerages and research houses believe:
ANAND RATHI RESEARCH
Nifty50 has taken support near its 50-day exponential moving average, which is near 7,676 zones. It has also holding above 50-EMA since last 42 trading sessions, and had earlier seen a strong bounce from the same support at 7,405 on March 16 and 7516 on April 11, 2016. It has formed a strong bullish candle with a gap-up, followed by a Hammer candle in the last trading session. Now, till it remains above 7,777 levels, the up move may remain intact for a target of 7,880 and 7,920 zones. However, 7920 and 7979 may provide sustained supply and halt the recent momentum.
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On the other hand, Bank Nifty has negated its immediate weak structure of making lower highs of last six sessions. The support is shifting from 16,000 to 16,161 while it faces resistance at 16,666 then 16,800 zones.
RELIANCE SECURITIES
Our near-term technical view will remain negative, though minor rebound cannot be ruled out before NIFTY faces any fresh selling pressure, as reversal in index post visiting its 50-days EMA (on the daily chart) and positive cross-over in Stochastic around oversold zone are signalling lack of selling interest in the market at this juncture. Fall in RSI and negative market breadth is still indicating weakness in the index, but due to lack of market participation, bears are not getting required power to drag market down.
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For the Nifty50, 7,900 will remain key level to watch out for, as any stable move above that level will bring some positivity in the market, however on the lower side, index will find support around its 50-days EMA, 100-days SMA and 50% Fibonacci retracement level of prior fall (placed in the range of 7,670-7,560). Support is placed around 7,670 and then at 7,600 levels, while resistance observed at 7,780 and then around 7,830 levels.
EQUINOMICS RESEARCH & ADVISORY
It looks like both macro fundamentals as well as corporate performance started improving. We have already seen improvements in FDI inflows, banking credit growth, fuel consumption, aviation traffic, cargo volumes at major ports, Current account balance, fiscal balance, and turnaround in IIP & core sector growth. If monsoon also succeeds, then we will have good recovery in the stock markets in the short-term.
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While we will remain alerted on the global deflationary scenario over the next six - nine months, we suggest our clients to stay invested in the equities. It is also time for realignment of portfolios based on March quarterly performance and more importantly the balance sheet conditions.
We will try advising suitably on the same over the next few weeks. From the last week results, MRF gives us a lot of comfort on both earnings and balance sheet. We suggest our clients to have anywhere 3% to 5% exposure to this stock in their portfolio.
ANGEL BROKING
In our view, there are pockets in the market where growth trends are picking up. We believe there are stock picking opportunities in the space outside of Sensex/Nifty and also in many of the newer listings in the upcoming sectors of the economy.
Our top picks comprise of companies that will benefit from strong consumption and from the government’s thrust on infrastructure. Our top consumption based plays are Blue Star, Siyaram Silk Mills and Radico Khaitan. Our picks that will benefit from interest rate cuts and higher government focus include LIC Housing Finance, Dewan Housing Finance, Mahindra Lifespace, NBCC and IL&FS Transportation Networks.
