On the index front, Nifty could test the crucial support zone of the lower band of prevailing up trending channel on the weekly chart around 11,000 this week.
Ajit Mishra
An awful week came to an end. The Nifty50 broke below crucial support levels as the threat of Coronavirus leading to global economic slowdown escalated to several geographies outside China.
Consequently, Nifty and Sensex lost 7 percent each during the week. The broader market indices, too, succumbed to the pressure this week and fell in-line with the benchmark.
Among the sectoral indices, even the defensives, like IT, could not remain resilient despite a weak rupee and lost ~8 percent.
Sectors like metal (down 14.5%) and auto (down 10.3%) bore the highest brunt as commodity prices and supply of auto components are likely to get adversely impacted due to the pandemic.
This week, the markets would continue to track the global indices which are under stress as coronavirus is expected to adversely impact global supply chains.
There are reports that US GDP growth will slow down considerably in Q1CY20, while fears of a recession are impacting European markets.
On the domestic front, Q3FY20 GDP data has come in a tad above expectations at 4.7 percent versus 4.5% in Q2FY20, and there is a considerable level of improvement in the farm sector growth at 3.5 percent (vs 2.1% in Q2FY20).
Amid all, some serious action is expected in the primary market as SBI Cards and Payment Services IPO opened on March 02 and will be closing on March 05.
On the index front, Nifty could test the crucial support zone of the lower band of prevailing up trending channel on the weekly chart around 11,000 this week.
And, any decisive break down below that level could trigger fresh selling and push the index towards 10,700 levels. In the case of a rebound, 11,500-11,700 zone would act as strong hurdles.
Despite the prevalent negative sentiment, investors should focus on accumulating quality stocks on dips, with medium to the long term investment horizon.
We still have a long list of outperformers from various sectors, which are not only bucking the trend but also attracting fresh buying interest.
In other words, they should have a bottom-up investing approach. For traders, it’s advisable to stay with the trend and focus more on stock selection.Here is a list of top two stocks which investors could look at going short in March series:
Ambuja Cements: Sell March Futures| LTP: Rs 201| Target: Rs 186| Stop-Loss: 216| Downside 8%
We are seeing a mixed trend in the cement space and Ambuja Cement has been hovering in the range of Rs 190-220 for the last six months.
Indications are in favor of a breakdown in the near future. Besides, the existence of a strong hurdle at Rs 220 is an added negative. We advise creating fresh shorts in the mentioned zone of 205-208.TVS Motor Company: Sell March Futures| LTP: 417| Target: Rs 390| Stop-Loss: 430|Downside 6 %
TVS Motors has been witnessing correction for the last two years and retraced considerably from its top. It was trading in a range of 430-500 and witnessed a breakdown from the same of late.
The chart pattern of the stock and negativity in the auto space are also in sync with our bearish view. We advise utilizing this opportunity to create fresh shorts within the mentioned levels of 413-416.
(The author is VP Research, Religare Broking Limited)
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