Market Khabar: Macro data, US Fed meet to guide markets

Spooked by the weak global cues, firm crude oil prices, jitters ahead of assembly polls to Karnataka and lack of follow up buying at higher levels, the indices snapped their five-week winning streak to close on a weak note during the week ended.  Sensex closed at 34,915, down by 54 points or 0.2 per cent, while the NSE Nifty closed at 10,618, down by 74 points or 0.7 per cent.

The broader markets underperformed as the mid- and small-cap indices closed lower by 2 per cent 1.1 per cent respectively. As general elections approach “Data is next political battleground” because crucial data has sparked a debate on credibility of government data, say observers.

Much of the criticism of the government’s last data revision rests on the fact that India economy’s suddenly appeared to be booming and gave a feeling that data is now being essentially politically massaged for government to give out propaganda for elections.

With RBI itself saying multiple revisions of GDP growth estimates are “confusing,” much less provide a true state of the economy, it is imperative that government comes “clean” on data.

Near term trend will be dictated by domestic macro data, Q4 results, FII and DII activity, the movement of rupee, crude prices and global cues. Investors have been attracted to the US by rising bond yields and a stronger US dollar. The yield on 10-year T-bonds has spiked this year to 3 per cent, and the dollar has surged 4 per cent against other currencies.

For the week ahead, chartists predict a range of 34,400-35,400 and 10,450-10,750 for the indices.

Stock Scan
Goa Carbon is one of the leading company’s engaged in the business of Calcined Petroleum Coke (CPC). CPC is used as a primary source of Carbon by Aluminum, Steel and Titanium dioxide industries.  There is a direct relationship between the progress and growth of CPC industries with the progress and growth of Aluminium and Steel industries. The company’s calcination plant of approximately 75,000 tons per annum capacity is located in southern Goa. The Company also has two other plants, at Bilaspur in Chattisgarh and at Paradeep. Buy on declines for target price of Rs 1,350.

Persistent Systems is engaged in the business of building software products. The company offers complete product life cycle services. The company’s segments include infrastructure and systems, telecom and wireless, life science and healthcare, and financial services.  It has presence in North America, Europe and Rest of the World. With renewed focus on emerging technologies like IoT, Genomics, Machine Learning, Blockchain and Cyber Security, the company is well poised to report fast growth in few quarters. Buy for target price of Rs 1,250.

Nelcast is engaged in the business of manufacture and sale of iron castings. The company is a supplier of ductile iron castings and grey iron castings. It manufactures parts that are used in various applications in automobiles, such as the engine, transmission, suspension, axle, brake and steering. The company has got excellent potential for growth, both in domestic and export markets and intends to expand its product base, to cater to other segments such as the off-highway vehicles, passenger cars and the railways. Buy for target price of Rs 175.

Futures & Options
Derivative segment witnessed brisk trading during the week ended. Market players turned cautious and preferred to book some profits ahead of an important political event: Karnataka polls.

Expect consolidation at current levels with individual sectors and stock rotation being in focus. On the options front, the maximum open interest in put options at 10,500 strike and maximum open interest in call options at 11,000 strike. On the technical front 10,550-10,575 spot levels is strong support zone and current trend will face resistance near 10,750-10,775 levels.

Barring banks, nearly all sectoral indices ended in red. Outperforming Nifty, Bank Nifty ended the week on a positive note with a gain of around 1 per cent to close at 24,645.

Apart from ICICI Bank, another eight banks will also announce their results next week. The important thing to watch in ICICI Bank results would be its asset quality performance and provisions and their impact on profitability.

Analysts are keen on MD & CEO, Chanda Kochhar’s view on the bank performance going forward. A close above 25,000 levels may propel Bank Nifty Futures beyond 26,000 level in very few sessions.

Ahead of IIP numbers, Capital Goods counters are likely to be in limelight. Buy Exide Inds, Amaraja and L&T for short term moves. Mild correction was seen in the FMCG stocks. Despite weakness in ITC, Tata Global and Emami, good accumulation was seen in Dabur and Jubilant Foodworks. Buy Dabur and Godrej Consumer. Concerns over trade war triggered selling in metal counters. Contrarians suggest accumulation of Tata Steel, Hindalco and JSPL in the correction.