Market likely to track global cues next week: 4 stocks to remain in focus
In line with bullish market signals on Friday, Indian stocks saw significant gains in the banking and finance sector. The Nifty gained 1.57% and closed at 17,594.35 while the Sensex gained 1.53% and closed at 59,808.97. All the sector indices closed on a positive note, with Nifty PSU Bank being the top gainer with a 5.4% rise, followed by Nifty Metal and Nifty Bank with gains of 3.55% and 2.13%, respectively. In a report released on Friday, the US Federal Reserve stated that interest rate rises will continue in an effort to reduce strong inflation, which caused US bond rates to surpass the 4% mark on Thursday.
As 10-year treasury yields drop from recent highs, US stocks rise on the global market, with gains across all sectors. The Dow Jones gained 1.17%, the Nasdaq gained 1.97%, and the blue-chip S&P 500 closed 1.61% higher. On the other hand, FPIs continued to sell in the domestic market in early March, selling a total of ₹6544 crores from March 1 to March 4. As a result, global investors’ attention in domestic equity markets diminished due to concerns about an economic slowdown caused by high inflation and contractionary monetary policies as RBI is expected to hike repo rate further. According to experts, the markets will closely follow global cues over the coming week.
FPI trend this week
Dr.V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said FPIs continued selling in early March too. However, the data ( NSDL) shows a net FPI figure of ₹8902 crores up to 4th March. This discrepancy is due to the US based investment firm GQG making a massive investment of ₹15446 crores in four Adani stocks. Excluding this, FPIs continued to be sellers to the tune of ₹6544 crores in March till 4th. Excluding the GQG investment, FPIs have sold equity to the tune of ₹41169 crores in 2023. FIIs are likely to sell at higher levels since the US 10-year bond yield is at 4% and this is attractive risk-free investment for FPIs. FPIs have been buyers in financials, capital goods and autos and sellers in Oil & Gas and metals.
Weekly market outlook
Ratnesh Goyal, Sr Technical Analyst, Arihant Capital said “On the daily chart of Nifty, it is trading near the support level of 200 SMA, and on the weekly chart, it is taking support from the lower channel. This indicates that the market is now taking support from its lower level, and we can see some stock specific action. In the coming trading session, if Nifty trades above the 17,650 level, if it starts to trade above, then it can touch the 17,850-18,050 levels. On the downside, the support is 17,500, and if it starts to trade below then it can test 17,350 and 17,100 levels.”
“On the daily chart of Bank Nifty, it is trading near its 50- day SMA level. On the weekly chart, we observe a bullish candlestick formation. This indicates that Bank Nifty can outperform Nifty. In the coming trading sessions, if it trades above 41,350, then it can touch 41,600 and 41,800 levels. However, the downside support comes at 40,900, and below that we can see 40,700–40,400 levels,” said Ratnesh Goyal.
Rahul Ghose, Founder & CEO – Hedged, an algorithm-powered advisory platform said “The Nifty Index is in a sideways trend with a very broad-based range in between 17250 on the downside and 18220 on the upside. Till either of these levels get taken out, markets will keep yo-yoing both on the upside and the downside. Also it is important to note that there is a near term resistance for the Nifty at 18040 as well, If Nifty manages to close above this level with a bullish candlestick formation, the likelihood of 18220 getting taken out increases drastically. Further talking about the trend, the likelihood of an upside move is more imminent than a downside move as the index has formed a nice circular base and is also moving up strongly from the lower bollinger band on the weekly chart.”
Stocks to remain in focus
Rahul Ghose, Founder & CEO – Hedged said two stocks to watch out for in the short term would be :
1) Reliance: The Reliance chart is looking good for the short term. Prices have closed strong on Friday and the stock has made a nice base near the lower bollinger bands here as well. The stock is also reacting from a weekly demand zone and is breaking out from a divergence pattern on the momentum indicators. One can hold this for a target of 2495 in the short term.
2) Canara bank: The stock has made a lovely positive divergence on the weekly chart and has closed last week with a bullish engulfing candlestick pattern. One can look to enter this stock around the 290 levels, keeping a target in mind at 320, The SL would be at 275. The Canara bank stock is also looking bullish as the ADX on the weekly chart is cooling off from the recent downturn that it was in, and one can see the redline trying to fall below the green line as well on this indicator.
Ratnesh Goyal, Sr Technical Analyst, Arihant Capital said IT stocks have seen some consolidation so they will remain in focus next week. Other segments in focus will be midcap and small cap. Below are the stock recommendations by Ratnesh Goyal.
3. Hariom Pipes may see an upside till target ₹500/550 with a stoploss ₹360.
4. TDS Power: Buy for the target ₹175/190 with a stop loss of ₹135.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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