The Indian benchmarks jumped nearly 3 percent on the closing of the long weekend for the market. The investors are still in hope for the stimulus package by the government.
Q) Sensex and Nifty rallied over 14% each in April. The Sensex is back above 33,000 while NIFTY reclaimed 9800. What is fuelling market rally on D Street?
Q) What is your call on banking and auto stocks which have run up quite sharply in the week gone by?
A) The domestic markets settled positive on 30th April, which was supported by buying in financial, IT, auto and metal stocks. On the sectoral front, the Nifty Auto index was up 6.45 percent.
Investors took positives from the news that India may attract $1.3 billion in passive flows as the country has moved into a new regime in which the FPI limit has been increased to the sector foreign limit.
Indications of easing of lockdown measures and stimulus hopes helped drive the markets. Short covering and roll-overs in the market also contributed to the gains. Global markets today rallied after early results from US-listed Gilead's trial of its drug Remdesivir showed on 30th April, it helped speedy recovery from the illness caused by the Coronavirus.
The risk of a correction has increased in the near term after the strong rally this week. Investors should keep this in mind and trade accordingly. Nifty has good resistance near the 10,000 mark.
The Nifty50 has support near 9500 – 9600 zones. The Nifty Bank’s resistance is coming near 22000 - 22300 zones, and it has support in the 20250 – 20700 zones.
Q) What are the important factors which investors could track in this week and in the month of May which could dictate the trend for markets?
A) Nifty’s movement this week will be driven by the way forward for resumption of business after lockdown, an announcement of any stimulus package, and stock-specific earnings results.
India is expected to roll out a stimulus package to help mitigate the damage from the crisis. The market has rallied 25 percent in a straight line and the future outlook is not going to be the same and things will not start improving in a straight line even after the lock-down is removed.
So one needs to be careful about his positions and the sectors he/she has invested in.
Q) What is your view on Tech Mahindra and HUL which came out with results on Thursday? What should investors do- buy, sell or hold?
A) Tech Mahindra posted nearly 29 percent less profit than Q4 last year mostly owing to environmental changes and disruption due to COVID-19. A dividend of 5 rupees per share has been declared and therefore sending positive vibes on the street.
The slowdown in economic activity is bound to impact IT industry however it could be seen that firm reported increased revenue than quarter ending March ‘19 which is a good sign and with the current trend of remote working and growing reliance on digital operations it is expected to see growing business opportunities for IT sector.
HUL- Buy at the levels of 2150-2155 after it bounces from support.
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