Indian share markets remain attractive despite run up as economic data favourable

By Rahul Shah

Equities index gained for a third week on strong foreign buying, impressive quarterly results and strong economy data boosted market sentiment. Sensex climbed 991 points or 1.70% to close at 60,950, while the Nifty Index rose 330 points or 1.9% to close at 18117, hovering close to their all-time peaks. Sensex climbed up over 3000 points in the last three consecutive weeks. PSU Bank, metal, pharma sectors were major gainers this week.

Market will focus on US, Europe and China CPI data along with domestic IIP data and quarterly results (Hindalco, Coal India, ABB, LIC India, M&M) amid short spun in the next week (Tuesday). Domestic equity market would remain attractive despite a sharp run up on account of strong micro data announced during the month of October. October PMI (Manufacturing, Service and composite PMI) reported above 55 which is much ahead of other global pears.

Both China and Euro zone October PMI data announced below 50 level. It means solid growth in the domestic economy on all fronts like USDINR fell to 1-month low, FIIs net buyers $1.5bn just five days, India Vix fell to 1-year low and upbeat quarterly results announcement. It will be a strong buying opportunity in Indian bourses despite any upside or downside in the global markets.

Among the overseas markets, the US market slipped 1-3% against the previous week close after the US Fed hiked interest rate by 75 bps and signaled monetary policy would need to be tightened more than previously anticipated to tame inflation. The Fed said that “ongoing increases” will likely be needed to bring rates to a level that is “sufficiently restrictive to return inflation to 2% over time. Bank of England hiked interest by 75 bps to 3% the most in 33 years on account of inflation spiked to 40-year high. US 2-Year bond Yield spiked 15-year high to above 4.70% and Dollar Index surged to 2-week high at 113 level.

However, there was some hope that the Federal Reserve’s efforts to weaken the jobs market may be taking effect and may help lower the nation’s high inflation. But the slowdown was still more modest than economists expected. The Fed will keep hiking interest rates toward levels rarely seen this millennium. Such moves would clamp the brakes tighter on the economy and drag on prices for stocks and other investments.

Global markets will bounce back after China announced to partially remove its Zero covid policy and poor US Unemployment rate may cool down US Fed on its hawkish stance. Expects positive for metal, cement (hope of price hike), auto and IT stocks on ex stocks next week on hope of improve global demand on hope of China to roll back some of its painful zero-Covid policies.

Nifty has formed a Bullish candle on daily and weekly frames and has been making higher lows from the last five weeks. Now, it has to hold above 18000 zones, for an up move towards 18350 then 18500 zones whereas supports are placed at 17950 and 17888 zones.

Trent: cmp 1506 SL 1470 target 1600

Trent has formed a bullish candle on the daily scale and it has started the fresh leg of upside after the breakout of the consolidation. The chart setup on the weekly and monthly scale is very strong which will take the prices higher. RSI oscillator is also positively placed on daily and weekly charts which will support the up move. Considering the current chart structure, we advise traders to buy the stock for an up move towards 1600 with stop loss of 1470

ITC CMP354 SL 345 target 375

ITC has given a consolidation breakout on the daily scale and it has formed a bullish candle which indicates positive price setup. The overall chart structure on the weekly and monthly scale has strong momentum for up move. RSI oscillator is also positively placed on daily and weekly charts which will take the prices higher. Considering the current chart structure, we advise traders to buy the stock for an up move towards 375 with stop loss of 345

(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution at Motilal Oswal Financial Services. The views expressed are author’s own.)