Despite better than expected GDP data, the markets, unnerved by PSU bank related developments and weak global cues, closed marginally lower during the week ended. Benchmark indices Sensex and Nifty closed 95 points and 33 points lower at 34,047 and 10,458 respectively. Bank Nifty slumped by 400 points to 24903. The election result over the weekend, particularly from Tripura, has come as a shot in the arm for the ruling party, but this is likely to have only marginal impact on markets on Monday. The market will discount economic news more than political news from now.
More significant will be the election outcome in Karnataka, MP & Rajasthan that will set the trend for the general election in 2019, say punters.
With decisive victory in Tripura and solid gains in both vote share and seats in Nagaland and Meghalaya; the government should go for faster execution of reforms.
Bond markets are in volatile phase. Liquidity has already reached a stage where the rise in government balances is leading to a deficit in the banking system liquidity. While redemption of market stabilisation bonds will add liquidity in mid-March, advance corporate tax outflows will be large enough to widen the deficit, say observers.
The near-term trend will be dictated by PSU bank-related developments, domestic and global macro data, developments in the Budget Session, trend in global markets, investment by FIIs and DIIs, the movement of rupee and crude oil price movement. For the week ahead, chartists predict trading range of 33,500-34,500 and 10,300-10,600.
Stock Scan
Ginni Filaments is engaged in the manufacturing of cotton yarn, knitted fabric, non-woven fabric, garments and wipes. Its segments include textiles and others. A state-of-the-art, modern facility with Spunlace technology was set up at Panoli, Gujarat. The plant capacity is 12,000 metric tonnes per annum and it can produce a wide variety of roll goods. The technology and equipments were provided by M/S AndritzPerfojet, France. The quality of the products manufactured in the plant is truly world class with very wide acceptability and validation. The company supports all brands by contract manufacturing for them in a facility that meets all exacting requirements of these multi-national hygiene companies. Buy on declines for target price of Rs 60.
Godrej Agrovet engages in animal feed, oil palm plantations, agrochemicals and poultry. It is one of the largest organised players in the Compound Feed market in India, with annual sales of more than a million tonnes across cattle, poultry, aqua feed and specialty feed. It focuses to improving the productivity of farmers by products and services that increase crop and livestock yields. Buy for target price of Rs 1,200 in medium term.
Tanfac Industries is a joint sector company promoted by Aditya Birla Group and Tamil Nadu Industrial Development Corporation (TIDCO). The company has technology tie ups with Davy Process, Chenco and Grasim Industries. It is the largest producers of Anhydrous Hydrofluoric Acid and Aluminium Fluoride in India and market Leader in AlF3 and HF in the domestic market. Buy for a medium-term target price of E Rs 225
Futures & Options
Mirroring the weak undercurrent in the cash market, the derivative segment also witnessed lower volumes. Continued selling by FIIs kept the sentiment subdued.
In the option segment highest open interest was seen at the 10,700-strike calls and the 10,400-strike puts. Punters expect further weakness in Nifty down to the retest of important support of at 10,300 levels for next week.
If the present range pattern (high low range of 10,650-10,300 levels) is broken in next fortnight, the downside target the Nifty is at 9,900 to 9,850 levels say techies.
Bank Nifty continued to underperform as fresh cases of defaults in PSU banks emerged. Banking sector continued to be embroiled in the PNB fraud during the week ended. Union Cabinet approved the Fugitive Economic Offenders Bill, 2017 that particularly seeks to protect the interest of lenders left high and dry by absconding corporate defaulters.
Amidst the fraud turmoil, SBI raised lending rates. Avoid PSU banks for present. Select private banks like InduSind Bank, Kotak Bank and Axis Bank.
Better than expected sales numbers have kept Auto counters in limelight. Further gains indicated in Hero Motocorp, Eicher Motors and Tata Motors.
Renewed buying interest was seen in Capital Goods counters. Buy on declines Voltas, BHEL and Havells.
Housing finance stocks like Repco Finance; PSUs like Coal India and NMDC; and FMCG firms like Hind Lever and Marico were attracting good buying interest. Technology stocks are back in the role of defensive bets. Buy on declines TCS, Infosys and NIIT Tech. Stay invested.
