stock market outlook, Nifty Bank Nifty technical update | Stocks to buy

By Rahul Shah

Equity benchmark Index posted their first weekly advance last week, since early February after a run of four weekly losses, buoyed by dip-buying in sectors such as software and healthcare. Sensex surged by 1216 (up 2.2%) to close at 55550 and Nifty advance 385 points (2.4%) to close at 16630. Russia-Ukraine crisis, higher energy price and rising USDINR kept the market highly volatile this week. USDINR surged to record high at $77, oil price has spiked to $140/bbl and Gold soared to a 19-month high at $2070/ounce during the week.

The market could not move upside on account of geopolitical tension and rising US Inflation. The Ukraine and Russia talks failed to make progress in halting the war and the U.S. inflation accelerated to a fresh 40-year high in February to 7.9% ahead of US Fed meeting next week which is major concern in the market. FIIs were net sellers to tune nearly 25k just five trading sessions. The US Government announced new sanctions on Russia for its invasion of Ukraine, including plans to revoke Russia’s “most-favored nation” trade status. The US Federal Reserve’s first increase in interest rates since before the pandemic was well broadcast, and markets may have little reaction if the central bank carries out its quarter-point hike on Wednesday this week.

However, investor focus remains on Ukraine, which continued to rattle markets in the past week, creating volatile swings in oil and sending stocks lower. The Fed’s rate hike is expected, but investors will be watching to see what the central bank has to say about inflation and the economy, as well as its projections for future rate hikes. On the domestic front, the ruling BJP has scored big in the assembly elections, winning four of the five states. The electoral wins will reassure markets about the central leadership maintaining a stable policy outlook.

Even as the Russia-Ukraine conflict and inflationary pressures are weighing on investor sentiment. The government has enough strength to pursue reforms such as a privatization program which may reduce the fiscal burden. The US Federal Reserve, Bank of England and Bank of Japan will decide on interest rates. Stability in Indian equity market will depend on the stable oil price. Every $1/bbl increase in oil price will add a $2bn fiscal burden. Above $100/bbl likely to hit the economy as Finance Minister projected $70-75/bll during the budget.

Nifty has completed one leg of a pullback rally, the possibility of higher intra-day volatility ahead of US Fed rate decision. 16,400 and 16,300 would be the key support areas and 20-day SMA or 16,800 to 17000 would act as an immediate hurdle for the bulls. Expect the uptrend formation will continue unless Nifty slips below 16,300. Nifty expected to be trading in a border rage of 16800-16200 level.

Tata steel
Target: Rs 1400 | Stop Loss: Rs 1270

Tata steel has retested the consolidation breakout level and has started the next leg on the upside. It has formed a bullish candle on the daily scale and has closed above its 200 DMA indicating strength in the counter. RSI oscillator is also positively placed on the daily and weekly scale. 3 Considering the current chart structure, we advise traders to buy the stock for an up move towards 1400 with a stop loss of 1270.

Bharat Electronics
Target: Rs 235 | Stop loss: Rs 208

BEL has given a breakout of the consolidation zone on the daily charts. It has formed a strong bullish candle which indicates buying interest in the counter. RSI oscillator is also positively placed on the daily and weekly scale. 3 Considering the current chart structure, we advise traders to buy the stock for an up move towards 235 with a stop loss of 208.

(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Servcies. Views expressed are the author’s own. Please consult your financial advisor before investing.)