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Nifty snapped 3–week gaining streak last week let down by US economy fears. The start to this week has been muted. Are you expecting consolidation in markets to continue in the run-up to the Fed meeting?
The benchmark indices witnessed correction last week, ranging from 1-2%, on the back of weak US Jobs data, and haunting fears of a US recession in 2025. Global markets also witnessed a sell-off despite crude oil prices collapsing to 14-month lows, clearly indicating that investors appear to tread cautious ahead of the US FOMC meeting next week.
It is a foregone conclusion that there is a very high probability of a rate cut, it’s the quantum of the cut that is driving the markets. Also, it is being expressed by some quarters in the US, that the US Fed appears to be behind the curve this time, in rate cuts. Hence, we are witnessing uneasiness and choppiness in the markets, which could continue to sway either way, till clarity emerges.
What are the important levels for Nifty and Bank Nifty for this week?
Nifty continues to outperform Bank Nifty, on the back of strength in IT, Pharma & FMCG. However, given the current domestic & global market scenario, markets are expected to trade sideways, with crucial support for Nifty seen around the 24400-24500 zone whereas resistance is seen around the 25,200-25,300 zone.
For Bank Nifty, the crucial support is seen around the 49,600-49,800 zone whereas resistance is seen around the 51,400-51,600 zone.Banks’ underperformance doesn’t abate and this remains a big worry for the markets. Should investors make any fresh moves at all if the view is medium term?
Banks are currently struggling to maintain their Net Interest Margins (NIMs) as credit growth and deposit growth are not in tandem, which is impacting the banking sector. Further, few private sector banks – the likes of ICICI Bank, Axis Bank, managed to maintain their growth but many public sector banks are witnessing a plateauing of growth in the near term, adding to the existing pressure. Overall, a few frontline banking stocks should ideally be in an investor’s long-term portfolio, which can be added in tranches, rather than at one go.
Crude oil has hit a 14 month low and that augurs well for OMCs, paints and tyre stocks. Do you concur with this view and have you spotted your picks here?
A sharp sell-off in crude oil prices has definitely added a fizz to the OMC, paints and tyre stocks as their cost burden declines, adding to their bottom-line, but it appears to be short-lived as most of the stocks in these sectors are witnessing profit booking. Only a sustained decline in crude oil prices could result in some significant value add to these companies, but it is very likely, that OPEC in coming weeks, might announce a cutback in crude oil production, to shore up the prices, as OPEC is more comfortable with prices trading in the range of $75-$85.
FPIs are net buyers so far in September which is a positive thing even as valuation concerns are being flagged. Where are they seeing most action and should retail investors take their cues from them?
FPIs so far, have invested close to Rs.11,000 crores in September itself, clearly indicating the renewal of interest in Indian markets, with money flowing into few large caps as well. Given the possibility of a rate cut in the US, and emerging opportunities in Indian markets on the back of strong macro-fundamentals, FPIs are very likely to continue to look at India as an investment opportunity. However, given that valuations in certain pockets cannot be called cheap, is what will keep FPIs from going all out, instead they will choose to be selective in their approach.
Piramal Pharma, Godrej Industries and Godfrey grabbed eyeballs with big rallies while Vodafone, Oil India and HUDCO were among the worst losers? What should investors do with them?
Investors should look at booking profits in Piramal Pharma, Godrej Industries and Godfrey Phillips, at least 50% unless they wish to hold these stocks from a long-term perspective, spanning 4-5 years, as markets are expected to remain volatile in the short-term, ahead of the US Fed meet and the US Presidential elections, both are significant events, capable of impacting both domestic & global markets.
On the losing side, investors need to maintain a tight vigil in Vodafone and should ideally look at exit opportunities. OIL India & HUDCO, can be held with support seen around the 590/600 zone for OIL India & 220/230 for HUDCO and exit opportunities can be explored on bounce back, as short-term tops have formed for both these stocks.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)