Global cues to set the tone for markets

Ignoring uncertainty over the timing of the beginning of the rate cut cycle, FII sales and recession news in some large economies; the domestic stock market smartly recouped its previous week’s losses and climbed more than one percent during the week ended. BSE Sensex rallied 1.16 percent to 72,427 points, and the Nifty jumped 1.19 per cent to 22,041 points. The broader markets underperformed benchmark indices with the Nifty Small-cap index falling half a percent and the Nifty Mid-cap index gaining just half a percent. In the near term, the bond yields will mainly get directional cues from global factors such as the movement in US yields and oil prices.

Good final leg of Q3FY24 earnings, falling inflation, and buying in most of the key sectors (Banks, Technology, Oil & Gas, Energy, Auto), and consistent DII support were some of the primary driving factors for Indian market during the week ended.

Observers feel that this may be the beginning of a pre-election rally, especially after pre-poll surveys by a couple of agencies. International crude oil prices are stabilising at higher levels as geopolitical tensions in the Middle East offset a forecast by the IEA that warned of slowing demand.

Near term direction of the market will be dictated by key takeaways from minutes of FOMC and MPC policies, US bond yields action, and global cues. Markets in mainland China were closed all week for the Lunar New Year holidays.

US markets will be closed on Monday on the occasion of President’s Day. The primary market will remain active in the coming week too, with Juniper Hotels opening its Rs1,800-crore IPO for subscription on February 21 followed by GPT Healthcare IPO on February 22, while Vibhor Steel Tubes is set to debut on the bourses on February 20 after the IPO closing with a massive 299 times subscription, in the mainboard segment.

F&O/ SECTOR WATCH

Heightened volatility was seen in the derivatives segment. Stock futures continued to witness sharp two way price swings. On the weekly options data front, the maximum Call Open Interest (OI) was seen at 23,000 strikes, followed by 22,600, 22,800, and 22,100 strikes. On the Put side, the 21,000 strike owned the maximum Open Interest, followed by the 22,000 and 21,700 strikes.

India VIX failed to sustain above the 16.5 zone again and closed the week down by 1.46 percent at 15.22 level, giving comfort to bulls. Overall options data indicates that the 22,000 is expected to be crucial inflexion point for further direction in the Nifty in the coming weeks. Stock futures looking good are ACC, Bajaj Auto, Granules, Federal Bank, Maruti and Wipro. Stock futures looking weak are BHEL, Gujarat Gas, IGL, Powergrid, REC, UBL and Zee.

STOCK PICKS FOR 2024

Alkem Laboratories is a well-established Indian generic pharmaceutical company that has gained a reputation as one of the largest players in the industry. It has maintained a top-10 position among domestic pharmaceutical companies for the past 20 years, operating across the value chain from product development to manufacturing and sales.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)