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By Rahul Shah
Sensex zoomed 909 points or 1.52% to settle at 60,842 while Nifty advanced 250 points or 1.40% to end at 17,854 on Friday. The strong quarterly results announced by PSU Banks and the growth-oriented Union budget announced by FM boosted market sentiment. Additionally, the U.S. Fed raised interest rates by 25 basis points, in line with optimistic expectations that the rate hike cycle may be coming to an end after global central banks hinted at a lower rate. ‘inflation. In Europe, the BoE and the ECB raised interest rates by 50 basis points, in line with expectations.
There were many events during the week that kept the stock market very volatile in the history of the stock market. Domestically, the Union budget, corporate results and monthly auto sales data were announced this week. In the global market, US Fed interest rate decision as well as mega tech results (Meta, Alphabet, Amazon, Apple, etc.), ECB and Bank of India rate decision England and the OPEC+ meeting were announced this week.
The week-long rout in Adani Group shares persisted, wiping $100 billion off market value on Thursday as they extended their decline after the group decided to cancel its follow-on public offering (FPO), which was been fully subscribed. The shares have suffered steep losses since the Hindenburg report on January 24, which raised concerns about the group’s finances which the group dismissed as “baseless”.
Bank stocks posted a smart gain and the Nifty PSU Bank Index climbed 3% from the previous week’s close. The good quarterly results of the PSU and Private Banking boosted banking stocks. IT stocks continued their northward journey after impressive quarterly results reported by most IT players. The Nifty Pharma index fell 3% after Divi’s Lab reported poor quarterly results. The metals index fell 8% this week due to weak global demand. The FMCG index jumped more than 3% on expectation of improved demand in rural areas after the government announced various programs aimed at boosting rural growth.
The next week will be important in the domestic market due to the RBI credit policy which will be announced on February 8th. The RBI is expected to raise interest rates by 25 basis points, while the RBI’s comments will be important in understanding their future course of action. This week, the US Fed raised interest rates by 25 basis points, but the Fed acknowledges that the pace of inflation has slowed, a sign that it may be nearing the end of its rate hikes. US 10-year bonds and the dollar index fell to their lowest level in 7 months after the statement by the US Fed. In the Union budget, the government has painted a heavily growth oriented budget to push infrastructure, energy and increase capital expenditure (capex) for 2023-24 by 33% to 10 trillion rupees to boost the rural and urban sector.
It is a fact that Indian markets have yet to participate in the rally in global markets due to the continued selling of FIIs into Indian stocks. FIIs were net sellers of over Rs 40,000 cr during the month of January, the highest since June 2022. On the other hand, Chinese markets climbed 60% from the September low while markets American and European jumped to 5 months and 8 months. high respectively. Market expects U.S. Fed rate hike cycle to end, China’s economic reopening and lower gasoline prices caused by mild winter fueled rally in global markets .
Stock recommendation
Apollo tires
CMP: Rs 330 | SL: Rs 315 | Objective: Rs 365
Apollo Tires retested the breakout on the weekly scale and it formed a bullish candle that indicates strength. On the monthly scale, the stock is forming higher highs since the last 3 months, indicating an upward trend. The RSI oscillator is placed positively, which will support the move to higher levels. Looking at the overall price structure, we expect the stock to edge up towards 365 zones. Therefore, we advise traders to buy the stock with a stop-loss of 315.
CDS
WPC: Rs 3286 | SL: Rs 3,430 | Objective: Rs 3600
The TCS gave a breakout of the trendline on a daily scale and is holding well above the same. It is forming higher highs over the past five weeks and the supports are gradually moving higher. The purchase is visible throughout the IT space, and a little follow-up can take it to higher territories. The RSI on the daily and weekly scale is in the bullish zone, which will push prices higher. Given the current chart structure, we advise traders to buy the stock for a rise towards 3600 with a stop loss of 3430.
(Rahul Shah is Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. Opinions expressed are those of the author. Please consult your financial advisor before investing.)
