Global brokerages see up to 12% rise in Sensex in 2018; more than 30 stocks to bet on

Global brokerages such as BofAML, Morgan Stanley, Credit Suisse, and BNP Paribas see Indian market to touch fresh record highs in the next calendar year.

 

The year 2017 has been a blockbuster year for India markets with benchmark indices breaking above key resistance levels and the year 2018 is unlikely to disappoint investors. The S&P BSE Sensex which has already rallied over 25 percent could well see another 12 percent rally from current levels.

Global brokerages such as BofAML, Morgan Stanley, Credit Suisse, and BNP Paribas see Indian market to touch fresh record highs in the next calendar year.

BNP Paribas has the most aggressive target on Sensex among all the other global investment banks’ which have come out with their strategy reports. BNP Paribas maintains its overweight stance on Indian markets and sees the S&P BSE Sensex heading towards 37,500, which translates into an upside of nearly 12 percent from current levels.

The global investment bank said that it wants to play the upcoming recovery and benefit from the impact of the previous year’s policy measures, and we like the ease of stock selection. India suffered from reform-related economic destruction, but a recovery seems clear underway.

Morgan Stanley:

The global investment bank in its most bullish scenario see Sensex climbing Mount 40K by December 2018 if earnings growth accelerates to nearly 20 percent. A combination of supportive global growth, improving capex, fiscal spending and a buoyant consumer augur well for growth in the year 2018.

Morgan Stanley introduced its December 2018 Sensex target at 35700 (base case). In the base case scenario which has a probability of 50 percent, the BSE Sensex would trade at 15x one-year forward earnings, which is below its historical average.

In the bull case scenario which has a probability of 30 percent, the S&P BSE Sensex could rally towards 41,500 on better-than-expected on policy measures as well as global factors. The earnings growth would also accelerate to 19 percent in FY2018and 27 percent in FY2019.

Credit Suisse:

As the 2019 general elections get closer, state elections are likely to get more market attention. This has limited direct economic impact, particularly after the budget is presented, but changes in market sentiment may drive volatility.

The market as a whole is not expensive on a relative basis, and while cuts should resume, we could still see double digit EPS growth in FY19. Top outperformers include names like SBI, ONGC, Tata Steel while Bajaj Finance, UltraTech, and Dr Reddy’s could underperform.

Nomura:

Saion Mukherjee of Nomura said the research house is bullish on India Equities with Nifty December 2018 target of 11,880. Their top stock picks are Reliance Industries, GAIL, HDFC Bank, SBI, Shriram Transport, Maruti Suzuki, M&M, Ashok Leyland and L&T.

Business is on the cusp of an upcycle which will drive strong earnings growth as corporate earnings-to-GDP ratio is at its lows, with significant contraction in margins and return on equity.

Nomura is overweight on financials, energy, infra/construction and healthcare while underweight sectors include IT, consumer staples, utilities & cement.

B0fAML:

The global investment bank sees the index slipping towards 32K towards the end of the next. BofAML said that bank said that it arrived at the valuations for the Sensex by using top-down estimates for earnings growth i.e. 15 percent and a 16.5x forward P/E multiple.

The S&P BSE Sensex currently trades at 18.5x forward which is well above its historical average of 15.3x. Large positive returns from current levels are only possible if the current elevated P/E multiple sustain so that the growth in earnings can drive stock prices. But, downgrades to estimates are still likely in 2018.

MORE WILL UPDATE SOON!!

The year 2018 will be all about individual stocks; 6 sectors looking attractive

The market is unlikely to break out in a hurry and sectors which did well so far could underperform in the next one year, while the beaten-down sectors such as PSU banks, roads, metals, industrials etc. will remain in demand in the next 6-9 months.

   

The S&P BSE Sensex rallied by about 25 percent so far in 2017, largely on the back of P/E re-rating while earnings stayed flat. Going into 2018, earnings are likely to pick up and P/E multiple could see de-rating, Manish Sonthalia, Head Equities- PMS at Motilal Oswal AMC said in an interview with CNBC-TV18.

The market is unlikely to break out in a hurry and sectors which did well so far could underperform in the next one year, while the beaten-down sectors such as PSU banks, roads, metals, industrials etc. will remain in demand in the next 6-9 months.

Here is a list of top 6 sectors which are looking attractive:

NBFCs which outperformed benchmark indices in the year 2017 may underperform in the next 12 months. “We are going to see rate increase sometime in FY19 and rates are going to harden with inflation and twin deficit coming back could weigh on NBFCs,” said Sonthalia.

Dairy:

The dairy theme is likely to do well given the fact that PM Modi plans to double the farm income in the next 3-4 years. In the dairy sectors, the focus will be on companies who are selling liquid milk rather than value-added products because the work capital cycle and cash conversion cycle is much more favourable in liquid milk.

Midcap IT & Pharma:

In the Midcap IT segment, Sonthalia likes L&T Technology Services and in terms of pharma space, we are betting on Ipca Laboratories, and Alkem Laboratories.

Gas stocks:

We are positive on City gas distributors — Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL). The economy is moving towards a gas economy which augers well for both the stocks. The valuations might look stretched but with PNGRB having a chairman, decision on new notified will come soon which will be positive for both these companies.

Real Estate:

Real Estate is entering into interesting times going into the future. The whole retailing space and residential housing space is witnessing a shift from unorganised to organised. The known industry plays are likely to see a bigger traction in terms of volume size as opposed to lesser known ones.

Jewellery:

In the jewellery space, Sonthalia likes Titan Company Ltd. The company is a major thematic play on the unorganised shifting to the organised. The hyper growth is here to stay.

MORE WILL UPDATE SOON!!

Volatility grips Dalal Street as Sensex slips 174 pts ahead of Fed rate decision

Investors could be cautious ahead of key events such as US Fed meet outcome, along with Gujarat elections’ second phase and the following opinion polls which will be out on Thursday.

 

In what could be termed as a volatile day of trade on D-Street, benchmark indices witnessed wild swings in both directions, before ending the day on a weak note. Investors could be cautious ahead of key events such as US Fed meet outcome, along with Gujarat elections’ second phase and the opinion polls which will be out on Thursday. Sentiment could also have been hit on the back of subdued economic data.

A gap-down opening was seen on the Indian market, but the index soon trimmed some of those losses to trade rangebound in the afternoon. But things took a turn for good, when a rally in banks, along with other frontline indices helped them trade positively. Sensex gained around 176 points intraday, before witnessing a sudden U-turn and falling over 200 points intraday in the penultimate hour of trade. The Nifty, too, had gained around 59 points intraday.

The Sensex closed down 174.95 points or 0.53 percent at 33053.04, while the Nifty was down 47.20 points or 0.46 percent at 10193.00. The market breadth was negative as 944 shares advanced, against a decline of 1718 shares , while 150 shares were unchanged.

Kotak Mahindra Bank, ONGC, HPCL and IOC were the top gainers, while BHEL, Tata Motors DVR, Vedanta and Cipla lost the most.

Nifty Midcap was down 1 percent. About two shares declined for every share rising on the NSE. All sectoral indices ended in red. Metal, pharma, realty and PSU bank fell the most, down 1-2 percent, followed by auto, FMCG and IT.

It was another day of losses on the bourses as key indices started the day on a subdued note and traded in the negative zone on mixed Asian cues and data showing a surge in India's consumer price inflation and a moderate growth in industrial production. This becomes a very tricky situation for the Central Bank to handle. While lower interest rates in the economy should likely give a boost to economic growth, higher inflation discourages the Central Bank to reduce rates as it might further spike inflation. This means that the markets could be more volatile in the near future as indecisiveness dominates sentiment. Both the benchmark Sensex and the Nifty finally closed the day with losses.

Meanwhile, oil stocks IOC, HPCL, BPCL bounced back, up 1.5-2 percent, after Brent crude cooled off after hitting USD 65 per barrel in the last two days.

Shree Cement, UltraTech Cement, JK Lakshmi Cement, JK Cement and Prism Cement gain 1-6 percent post SC order that allowed the use of petcoke.

Canara Bank, Allahabad Bank, LIC Housing Finance, Manappuram Finance, HDIL, DLF, Peninsula Land, Indiabulls Real Estate, Voltas, Havells, Petronet LNG, Century Textiles, Tata Elxsi, Religare Enterprises, HEG, Graphite India and Rain Industries were down 1-5 percent.

Bharti Airtel shares closed over 1.3percent lower after gaining nearly 2 percent intraday after the company decided to sell 20 percent stake in its DTH arm to US private equity firm. The rally had spilled over to Dish TV as well, which gained 4 percent, before falling around one percent.

InterGlobe Aviation shares fell 4 percent on equity dilution by promoter entities through offer for sale that opened for subscription. Two promoter entities of the IndiGo owner planned to offload shares worth at least Rs 1,245 crore through the offer for sale route on Wednesday and Thursday.

JB Chemicals & Pharmaceuticals ended flat, before gaining 3 percent on receiving approval from the US health regulator for anti-hypertensive drug.

Rico Auto Industries shares rallied more than 3 percent intraday Wednesday on signing a joint venture agreement with Singapore-based company. The stock ended 0.20 percent higher.

Markets continue to look weak overall with the real estate sector beginning to sell off too; what went up the highest in the preceding rally, looks to be correcting now. Ahead of the Fed policy decision tonight and the Gujarat exit polls soon after, we recommend a wait-and-watch policy at this juncture with a bias on the short side.

MORE WILL UPDATE SOON!!

Nearly 30 stocks where MFs raised stake more than doubled wealth in 2017; do you own any?

Retail investors have pumped in Rs1.26 lakh crore into mutual funds in the month of November, driving industry assets under management to an all-time high of Rs21.8 lakh crore.

After a flat 2016, bulls clearly dominated D-Street in 2017 as benchmark indices rallied nearly 25 percent in the year. The biggest contributor to the rally were retail investors as more household savings got channelized into equity markets via mutual funds (MFs).

Small and midcap stocks rallied, thanks to record inflows from mutual fund throughout the year 2017. As many as 28 stocks in which fund managers raised stake throughout 2017 more than doubled investors’ wealth which includes names like HEG, Yuken Ltd, V2 Retail, Dilip Buildcon, Minda Industries, SpiceJet, JM Financial, NOCIL, Ramkrishna Forging, Tata Metaliks, Jindal Steel etc. among others.

Majority of stocks mentioned in the list belong to the small and midcap space. It looks like mutual fund managers are testing new waters as some of the investment made are for the very first time in the year 2017.

Fund managers raised stake from 0.04 percent to 1.6 percent in HEG which has already given a return of over 1000 percent so far in the year 2017.

Similarly, Fund managers raised stake in Dilip Buildcon from 2.92 percent in the March quarter to 5.04 percent recorded in the September quarter.

We have just around three-four percent of our retail assets in mutual funds and equity. It is almost 15-20 percent for the developed markets. Provided these midcaps and smallcaps don’t mess in terms of going for badly priced acquisitions or taking some steps which are not in the right spirit of the corporate governance, they should be able to do well over the next four-five years.

Indian markets rallied in one straight line without giving investors any big opportunity to enter. The market bounced back swiftly after 3-4 percent correction; hence, plenty of money is still standing on the sidelines ready to get invested.

If there is a big correction in the market, it will be quickly bought into especially by the institution which are sitting on a big cash pile.

Retail investors have pumped in Rs 1.26 lakh crore into mutual funds in the month of November, driving industry assets under management to an all-time high of Rs 21.8 lakh crore.

With the latest inflow, total infusion in MF schemes reached Rs 3.8 lakh crore in the first eight months (April- November) of the current fiscal, latest data with Association of Mutual Funds in India (Amfi) showed.

Equity and equity-linked schemes attracted over Rs. 20,300 crore. In addition, more than Rs 7,600 crore was invested in balanced funds. Further, over Rs 9,300 crore was put in the debt funds. In contrast, gold ETFs continued to see a net outflow of Rs 89 crore.

If we look at the trend for equity schemes, MFs have poured in more than Rs 30,000 crore in the December quarter, according to data collated from Capitaline.

The amount of money going into equity schemes more than doubled in the last three years. Fund managers were pouring a little over Rs 14,000 crore in the December quarter, back in the year 2014 which has now reached well above Rs 30,000 crore in the year 2017.

Fund managers have already poured in a little over Rs 31,000 crore so far in the December quarter of 2017.

 

Inflows into domestic Mutual Funds continue to remain strong since mid-2014. Domestic flows have contributed significantly to equity investments while foreign investments, on the other hand, remained volatile. Increasing return on equity in the US may shift the flow of funds,” BofAML said in a report.

Primary issuance in India too has been strong in FY18. Further, equity issuance to the tune of USD 5 billion is expected in the near future. The supply of money will create demand and help in growing infrastructure.

Stocks in which MF have a double-digit stake:

Many small and midcap stocks in which fund managers have a double-digit stake have managed to outperform Nifty50 returns so far in the year 2017. As many as 30 out of 83 stocks have given negative return while the rest managed to outperform Nifty.

Some of the stocks in which fund managers have double-digit stake include names like Equitas Holdings, Max Financial, KNR Construction, Federal Bank, India Terrain, Repco Home Finance, HSIL, Atul, Tata Chemicals, BEML, PNC Infratech, and CG Power etc. among others.

MORE WILL UPDATE SOON!!

Buy, Sell, Hold: 7 stocks on analysts radar today??

CLSA has maintained its buy rating on Arvind with increased target price at Rs 538 (from Rs 440 per share) but reduced FY18/19 EPS estimates by 16/2 percent.

 

Bharti Airtel

Brokerage - HSBC | Rating - Buy | Target Rs 575

While maintaining buy call on Bharti Airtel with a target price of Rs 575 per share, HSBC said it believes company's operations in Africa have further upside.

The company may be keen to unlock value in its African operations sooner rather than later, according to the research house.

HSBC estimates FY17-20 revenue CAGR at 1.4 percent and EBITDA CAGR at 11.1 percent for Africa operations.

Catalysts for Africa are improvement in revenue growth, particularly from data, it said. "The downside risk to our outlook for African operations is lower capex spend."

India remains the priority for Bharti Airtel. Company may lower Africa capex if India recovery is delayed beyond FY19, HSBC feels.

Tech Mahindra

Brokerage - Citi | Rating - Sell

Citi has maintained sell call on Tech Mahindra, saying overall margin is expected to improve over the next few quarters. At 15x FY19, the stock is not cheap, the research house said.

Tech Mahindra will continue to evaluate M&A for capability addition, it feels.

Meaningful surprises are difficult to achieve given the industry headwinds, it said.

Arvind

Brokerage - CLSA | Rating - Buy | Target Rs 538

CLSA has maintained its buy rating on Arvind with increased target price at Rs 538 (from Rs 440 per share) but reduced FY18/19 EPS estimates by 16/2 percent.

Cash flow from brands business is critical to a rerating, it said, adding value unlocking depends on Brand & Retail (B&R) business being able to fund its own growth.

CLSA sees business getting stronger both in textiles & B&R. It values the B&R business at A 22x EV/EBITDA.

SBI

Brokerage - Goldman Sachs | Rating - Buy | Target Rs 396

Goldman Sachs has upgraded SBI to buy from neutral with target price at Rs 396 per share as it feels the bank is best positioned to benefit from improving asset quality cycle.

The research house expects bank’s return on assets to improve to 0.95 percent by FY20 from 0.22 percent in first half of FY18.

It is a prime candidate to get growth capital under government's SOE recapitalisation plan, Goldman said.

Maruti Suzuki

Brokerage - Morgan Stanley | Rating - Buy | Target Rs 10,563

Morgan Stanley has overweight call on Maruti Suzuki with increased target price at Rs 10,563 (from Rs 9,102 per share).

"End-market opportunity & superior return on capital employed justifies the valuation," the research house said while maintaining forecast of 22 percent FY18-20 EPS CAGR.

Jet Airways

Brokerage - Edelweiss | Rating - Buy | Target Rs 822

Edelweiss has upgraded Jet Airways to buy from hold and raised target price to Rs 822 from Rs 548 per share as measures initiated by new CEO would turnaround company's stressed financials.

The company is focussing on sustaining growth via cost rationalisation. The strategy is to focus on cost efficiencies & debt reduction, it said.

Edelweiss raised FY18 EBITDAR margin to 16.8 percent from 15.5 percent.

Motherson Sumi Systems

Brokerage - HSBC | Rating - Buy | Target Rs 425

HSBC has maintained buy call on Motherson Sumi with increased target price at Rs 425 from Rs 376 per share as it expects innovation & cross-selling to support business growth.

It is well placed to benefit from increasing role of auto component suppliers, it feels.

With the recent fundraising, Motherson is ready for multiple acquisitions, HSBC said.

The research house said slowdown in global car market and rupee appreciation are downside risks its rating.

MORE WILL UPDATE SOON!!

Nifty likely to face resistance at 10,350: 3 stocks which can give up to 10% return?

The strong reversal trend in the Nifty index from the last two trading sessions translates to a possible breakout from its short-term hurdles placed at 10,350 level and likely to trade near 10,400 level if its holds above 10,350 level.

The Nifty index witnessed a strong comeback after trading near its crucial support level placed at 10,040 zone and managed to close above its critical 20 & 50-days EMA level.

On the daily price chart, it made a strong bullish candlestick pattern coupled with index closing above its 20 & 50-day EMA indicating a shift in sentiment.

Further, the secondary momentum indicator suggests an uptick in trend with relative strength index (RSI) entering buy zone coupled with continued uptrend momentum depicted in the trend line.

Based on the Fibonacci retracement, a major support is seen at 10,183 level followed by 10,089 level and immediate resistance will be seen at 10,350 level.

The strong reversal trend in the Nifty index from the last two trading sessions translates to a possible breakout from its short-term hurdles placed at 10,350 level and likely to trade near 10,400 level if its holds above 10,350 level.

However, it may also witness a weak support for the uptrend if it fails to close above this trend line.

Here is a list of top 4 stocks which could give up to 10% return in the short term:

Kesoram Industries: BUY| Target Rs 163| Stop-loss Rs 137 | Return 10%

Kesoram Industries witnessed a major breakout during the last week’s trade after facing consolidations near Rs119-123 level. But, the price action gave a positive outlook on the weekly chart despite closing lower from the previous level.

The strong sentiment prevailed as it witnessed a major volume breakout which enabled the stock to rally. On charts, Kesoram formed a “cup & handle” kind of a candlestick pattern along with its bullish trend pattern in its daily price chart.

Further, the secondary momentum indicator suggested a similar support for the scrip with price trading above all the level at current regime.

The MACD at 4.69 also suggests strong support for the rally with bullish crossover. Based on Fibonacci Retracement, the stock is facing a resistance at the Rs174 level and support level at Rs136.

We have a BUY recommendation for Kesoram Industries which is currently trading at Rs. 148.35

Graphite India: BUY| Target Rs 684 | Stop-loss Rs 634 | Return 4%

Graphite India witnessed a strong bullish reversal trend after consolidating at a crucial support level placed at the Rs540-555 level and continued with uptrend trajectory.

Despite witnessing a negative outlook last week, it witnessed a major breakout from higher circuit towards the weekend session. The breakout was coupled with volume support along the trend-line. The stock gained about 12 percent on the weekly basis.

On the daily price chart, the stock formed a bullish trend as it ended the weekend session on positive cues. Following a momentum indicator, which supports bullish uptrend with an increase in RSI at 67 level coupled with MACD at 19.8 showing signs of crossover from its signal-line.

Further, the stock managed to close above its 20 & 50-days EMA, and thus strengthening the positive sentiment in forward-looking session.

The stock is currently facing upper-resistance at 808-level and immediate support at 598-level. We have a BUY recommendation for Graphite India which is currently trading at Rs. 659.70

West Coast Paper Mills: BUY| Target Rs299 | Stop-loss: - Rs. 268 | Return 4%

West Coast Paper witnessed a strong uptrend momentum forming peaks on its long-term chart despite a flat movement during the initial trading session. It was further aided by growth in volumes along with its upward movement and gained about 15 percent on an intraday basis.

The scrip formed a strong bullish candlestick-pattern on its weekly price chart and continued to trade laterally on 60-degree trend line touching an upper band which indicates a positive signal.

The secondary momentum indicator further suggested a strong support for an uptrend regime with incremental in its RSI level from the previous zone along with MACD still continuing above Signal Line.

The stock is currently facing a resistance at 310 level and support level at 256. We have a BUY recommendation for West Coast Paper Mills which is currently trading at Rs. 287.20

MORE WILL UPDATE SOON!!

Dow Jones 30 and NASDAQ 100 Price forecast for the week of December 11, 2017, Technical Analysis

Stock markets around the world continue to find reasons to go higher, this week it was a stronger than anticipated jobs number.

Dow Jones 30

The Dow Jones 30 has gone back and forth during the week, forming a slightly neutral candle. I believe that pullbacks at this point, which I believe are also going to be very likely, should be buying opportunities. I believe that the markets will continue to go higher, and I think that the 23,500 level is massively supportive, and essentially the short-term “floor.” Overall, I do believe that selling is all but impossible, least not until we would break down below the 23,250 level, which would show a shift in attitude, and most certainly if we managed to break down below the 22,000 handle. In fact, at that point I think it would be a trend change. That seems very unlikely though, so these dips continue to be buying opportunities for those who are patient.

NASDAQ 100

The NASDAQ 100 has found enough support underneath to bounce and form a hammer again this week, and that tells me that the market is trying to break above the 6400 level, eventually reaching towards the 6500 level above. If we were to break down below the 6200 level, then we may go to the 6000 level eventually, but right now it appears that all stock markets are ready to rally, and that of course means that we will probably continue to see traders pick up these dips as value.

If we were to break down below the 6000 level, however unlikely at this point, then I would be a massive cellar as it would show just how quickly things have changed. When you look at the Stochastic Oscillator, it does look as if the market is overbought at this point, but it seems that nobody cares.

MORE WILL UPDATE SOON!!

S&P 500 Price forecast for the week of December 11, 2017, Technical Analysis

The S&P 500 pulled back drastically during the week, but found enough support underneath to turn around and form a hammer by the end of the week as the jobs number was slightly larger than anticipated in America.

The S&P 500 initially fell during the week, but found enough support later to turn things around and form a hammer at the 2650 handle. A break above the top of the candle should send this market to the upside yet again, as I think the market will go looking towards the 2700 level above. A breakdown below the bottom of the candle would be very negative, perhaps looking towards the 2600 level next. A breakdown below there should send the market much lower and towards the 2550 handle. Ultimately, this is a market that is bullish, and you certainly can’t sell, and it almost looks as if it’s ready to go into more of an impulsive move. This would line up with the “Santa Claus rally” that we will quite often see, as money managers try to pad their results for the last 12 months.

If we did breakdown at this point, that would be a very big surprise, as it typically doesn’t happen, and of course the jobs number in America was relatively decent. I think this remains a “buy on the dips” situation going forward, and I certainly don’t have any interest in shorting the S&P 500 as it has been so relentless, and it’s moved to the upside. In general, I believe the stock markets around the world are going to go higher in the S&P 500 will march right along with the rest of them. It looks as if the rally continues over the next several weeks.

   

MORE WILL UPDATE SOON!!

Outlook for Nifty Bank for the week (Dec 11, 2017 – Dec 15, 2017)

Nifty Bank closed the week on positive note gaining around 0.50%.

As we have mentioned, last week that support for the index lies in the zone of 25000 to 25100 from where the index broke out of triple top pattern. If the index manages to close below these levels then the index can drift to the levels of 24500 to 24600 where break out gap for the index is lying. During the week the index manages to hit a low of 24813 and close the week around the levels of 25321.

Support for the index lies in the zone of 25000 to 25100 from where the index broke out of triple top pattern. If the index manages to close below these levels then the index can drift to the levels of 24500 to 24600 where break out gap for the index is lying.

Minor resistance for the index lies in the zone of 25400 to 25500. Resistance for the index lies in the zone of 25900 to 26000 where channel resistance for the index is lying. If the index manages to close above these levels then the index can move to the levels of 26300 to 26400.

Range for the week is seen from 24700 to 24800 on downside & 25700 to 25800 on upside.

MORE WILL UPDATE SOON!!

Outlook for Nifty for week (Dec 11, 2017 – Dec 15, 2017)

 

Nifty closed the week on positive note gaining around 1.40%.

As we have mentioned last week, that support for the index lies in the zone of 10000 to 10050 where medium term moving averages and low for the month of November-2017 are lying. If the index manages to close below these levels then the index can drift to the levels of 9650 to 9700 where 200 daily moving averages and lows for the month of August-2017 and September-2017 are lying. During the week the index manages to hit a low of 10033 and close the week around the levels of 10266.

Support for the index lies in the zone of 10000 to 10050 where medium term moving averages and low for the month of November-2017 are lying. If the index manages to close below these levels then the index can drift to the levels of 9650 to 9700 where 200 daily moving averages and lows for the month of August-2017 and September-2017 are lying.

Resistance for the index lies in the zone of 10200 to 10300 where short term moving averages and break down levels are lying. If the index manages to close above these levels then the index can move to the levels of 10480 to 10520 where trend-line joining highs formed in the month of September-2016 and August-2017 is lying.

Broad range for the week is seen from 9900 on downside & 10500 on upside.

MORE WILL UPDATE SOON!!

Market Week Ahead: Gujarat polls, Fed meet among 10 things to keep investors busy

If the BJP wins by a big margin then the market could rally or hit fresh record highs, but if it scrapes through then there could be correction in the short term which would be a good buying opportunity.

 

Sharp recovery in last two sessions helped the market gain more than 1 percent in the passing week, ahead of the first phase of Gujarat elections on Saturday. The rally was backed by a latest survey which said that BJP is likely to win the Gujarat elections and positive global cues post Brexit deal. At the start of the week, the market was concerned after ABP-CSDS's opinion poll said that there could be tough fight between BJP and Congress.

The two-day rally indicates that the market may have digested BJP victory in Gujarat, but has not priced in a landslide victory, experts suggest.

According to them, there could be some more upside, but as we move closer to exit polls (after second phase voting on December 14) and the outcome of Gujarat elections on December 18, the volatility is likely to increase.

Majority of experts feel the BJP is likely to win Gujarat elections but the Congress may manage to get some voting share of BJP due to demonetisation and GST concerns.

If the BJP wins by a big margin then the market could rally or hit fresh record highs, but if it scrapes through then there could be correction in the short term which would be a good buying opportunity, experts said.

The market rallied 23 percent in 2017 as it, so far, has been hopeful that BJP is likely to win general elections 2019 and as result of which there will be consistency in economic policies and reforms.

"We feel other factors will take a back seat now as all eyes are on Gujarat election. The recent opinion polls indicate the ruling party, BJP, will retain the state, but may see loss of vote share," Jayant Manglik President Retail Sales Religare Securities said.

Hence, all focus in the coming week would be on Gujarat elections, though there are other important factors like Federal Reserve rate decision, CPI inflation and factory data due to be announced.

Manglik suggests keeping leveraged positions hedged, considering the possibility of volatile swings ahead. Nifty has next hurdle at 10,350, he said.

Mustafa Nadeem, CEO, Epic Research said as derivatives data suggested earlier as well the range for Nifty may continue to be larger as active strikes were at 10,100 to 10,500.

He expects the range in the coming week to be further squeezed to 10,150 to 10,400. A lot of action will depend on voting percentage in state and polls that may further give much decisive direction to the market, he said.

Here are 10 things that will keep investors busy next week:-

Gujarat Elections

Gujarat elections are very important for BJP being a ruling party in the state for more than two decades and Narendra Modi who had been chief minister before becoming the Prime Minister of the India.

The voting for first phase (for 89 seats of Saurashtra and south Gujarat) began in Gujarat on December 9 and the second phase (for 93 seats of north and central Gujarat) will take place on December 14. The results of polls will be announced on December 18.

All state elections lined up before Loksabha elections 2019 are very important for Modi government.

Federal Reserve Meet

The Federal Reserve is scheduled to meet next week (December 12-13). Analysts largely expect the central bank to raise interest rates by 25 basis points on Wednesday, for third time in current year. Short-term interest rate is currently at 1-1.25 percent.

Macro Data

In the coming week, we have few crucial numbers - November CPI & October industrial output data on December 12 and WPI inflation on December 14 - which were acting as breathing space for RBI to continue to maintain status quo.

"India's Industrial production which was at 3.8 percent, is crucial to watch as the revival seen in numbers need to be maintained or it was a one-off event. CPI inflation which was at 3.59 percent, highest in last few month but around comfortable levels will also be eyed," Mustafa Nadeem, CEO, Epic Research said.

Apart from that, balance of trade data will be released on Monday, current account on Tuesday and foreign exchange reserves for the week ended December 8 on Friday.

India's foreign exchange reserves increased by USD 1.2 billion to touch USD 401.94 billion in the week to December 1, according to the RBI data.

IPO and Listing

Hospital operator Shalby will debut on Friday, after its issue was oversubscribed 2.82 times on December 7.

The Rs 70-crore initial public offer of Astron Paper & Board Mill will open for subscription on Friday and close on December 19, with a price band of Rs 45-50 per share.

Technical Outlook

The 50-share NSE Nifty formed a solid bull candle for the second consecutive day in a row on Friday. With the 221 points rally in two straight sessions, the index is now trading above its crucial short-term moving averages and is on track to hit 10,350 levels as long as it trades above 10,121, experts feel.

"The sharp upside bounce in Nifty could be cheering factor for bulls to make a comeback and this upside momentum is likely to continue for next week," Nagaraj Shetti, Technical Research Analyst, HDFC securities said.

The overall chart pattern is indicating a possibility of further upside potential up to 10350-75 levels by next week and there is a possibility of near term downward correction from the highs, he added.

Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities said, "The Nifty formed a Bullish Candle on the Daily chart. It managed to surpass its 50 DEMA and covered its half of the losses made in a previous week. It has to continue to hold above 10,178 to extend its move towards 10,350-10,400 zones while on the downside support exists at 10,150 then 10,094 mark."

FIIs and DIIs

FIIs and DIIs data will be of a crucial importance to watch out for in the coming week, especially before and after the outcome of Gujarat elections (December 18).

Foreign institutional investors were net sellers in four out of five sessions last week as they sold Rs 4,161 crore worth of shares but they were net buyers to the tune of Rs 19,180 crore worth of shares in November.

Domestic institutional investors have been net buyers since April 2017. In current month, they bought nearly Rs 5,200 crore worth of shares, following Rs 9,200 crore worth of buying in November.

Stocks in Focus

On Monday, Unitech may continue to lock at upper circuit after The National Company Law Tribunal on Friday allowed the government to appoint 10 nominee directors.

Hexaware may react positively after a media report indicated that Baring Asia is looking to sell 10-15 percent stake in company through block deals.

Axis Bank will be in focus as the bank received approval from shareholders to raise Rs 11,626 crore by selling a stake marquee investors.

IL&FS Engineering Services stock is likely to open higher on Monday on winning pipeline laying contract worth Rs 216 crore.

Small steel companies will be in focus after CNBC-TV18 reports quoting Cogencis that Steel Minister will consider iron ore price cap.

Max India may react negatively after Delhi Health Minister cancelled license of Max Hospital at Shalimar Bagh.

Global Cues

Global cues are likely to help the Sensex open on a positive note on coming Monday. Stronger-than-expected jobs report pushed Wall Street to record close.

Crude oil price movement will be closely watched as Brent crude futures have been trading in a range of USD 61-65 a barrel after it crossed the USD 60-mark. On Friday, it settled at USD 63.40 a barrel on Chinese crude demand and threats of a strike in Africa's largest oil exporter.

Apart from FOMC's rate decision on Wednesday, Bank of England and European Central Bank's monetary policy meeting will be held on Thursday. Analysts don't expect any change in interest rates from both central banks but the commentary would be keenly watched.

On the economic data front, Japan's producer price index (PPI) data for November will be released on Tuesday, core machinery orders for October on Wednesday and manufacturing PMI on Thursday.

In the US, November PPI data will be announced on Tuesday, CPI on Wednesday, manufacturing and services PMI on Thursday and November industrial & manufacturing production on Friday.

Europe's October industrial production data will be released on Wednesday and China's November industrial production on Thursday.

Some of the key economic data releases includes inflation data from the UK (CPI) and US (CPI and PPI), retail sales numbers from the US and UK, and jobs data from the UK and Australia.

MORE WILL UPDATE SOON!!