Market Khabar: Q4 results, macro data to guide markets

Encouraged by prediction of 80 per cent probability of a normal to above normal monsoon and dovish RBI statement, the markets closed on a positive note during the week ended. Gaining for the second consecutive week, the Sensex closed at 33,627, up by 658 points or 2 per cent while the Nifty closed at 10,331, up by 210 points or 2.1 per cent. 

Mirroring the return of speculators in the broader markets; the mid- and small-cap indices have vaulted 4 per cent and 5.2 per cent to close at 16,597 and 17,883. The Goldilocks scenario that the RBI has outlined for the new fiscal — with higher growth expectations and lower inflationary forecasts — could very well indicate rates on hold for the whole year, say analysts. 

Slowing inflation, accelerating growth and an economy that relies on domestic consumption may help cushion India from the trade war between the US and China. US stocks tumbled on Friday as trade tensions between the US and China heated up. A full-blown trade war would have much more profound economic implications for both the countries.  It would also drag down global trade and put vulnerable economies under pressure. 

On Monday, the market may react to sharp fall in the US markets on Friday due to trade war tensions and weaker-than-expected US non-farm payroll data. 
Near term trend will be dictated by Q4 results, macro data, developments over trade war, FII and DII activity, the movement of rupee and crude oil prices.
For the week ahead, chartists predict trading range of 33,000-34,250 and 10,125-10,500 for the indices.

Stock Scan
Globus Spirits is engaged in manufacturing, marketing and sale of Indian Made Indian Liquor (IMIL), Indian Made Foreign Liquor (IMFL), Bulk Alcohol and contract bottling for established IMFL brands. The company operates fully operational production units that allow maximising alcohol yield while maximising production of by products leading to complete utilisation of the raw material. The company expects efficiencies to be even more superior in recently commissioned plants in West Bengal and Bihar. Buy on declines for price target of Rs275 in medium term.

Cantabil Retail India is engaged in the business of designing, manufacturing, branding and retailing of apparel and apparel accessories through chain of retail store under the brand name CANTABIL and Bonetti. The company is also into the business of real estate trade. The company is confident that it will improve its performance in FY19. The long-term outlook for the sector remains to be positive. With the share of organised retailing in the total retailing sector, expected to continue to increase dramatically after the introduction of GST, heightened interest is evident in retail stocks. Use corrections to buy for target price of Rs 275.

LT Foods is an emerging global food company with a focus on basmati and other speciality rices, organic foods and convenience rice-based products. The company is engaged in milling, processing and marketing of branded and non-branded basmati rice, and manufacturing of rice food products in the domestic and overseas market. It has also undertaken the inorganic route of acquisitions to add value. Buy on declines for target price of Rs 170.

Futures & Options
Amidst sharp volatility, the derivative segment witnessed brisk trading during the week ended. In the option segment maximum open interest was seen at 10,500 strike call option and 10,000 strike put option. On the back of weakness triggered by the US-China trade war rhetoric, the coming week may see weak opening. However after the initial weakness, current uptrend may see Nifty touch 10,450-10,500 levels but could eventually lead to a formation of reversal pattern at the highs and resumption of next round of declines. Exit from weak counters in the present rally. 

For Bank Nifty, 25,000 psychological mark is going to act as a strong resistance zone. With the start of Q4 results season, stock specific moves are on cards. 
Ahead of Q4 results, mild buying was seen in the tech counters. Commentary and guidance for FY19 hold key for near term movement of tech counters. Buy at lows Infosys, TCS, TechM and Wipro. 

News flow from ICICI Bank episode is spawning rumors on other private banks. Stay alert on fresh volatility in bank counters. Contrarian’s advice buys in smaller PSU banks. Buy Allahabad Bank and PNB for ‘relief’ gains. 

GST gains is indicated in FMCG stocks. Buy HUL, Godrej Consumer and Marico. The rally in automobile counters is likely to go on. Buy Hero Motocorp, M&M, Bajaj Auto and Tata Motors. Capital goods counters are witnessing good accumulation. Buy Voltas, CG Power, Havells and Bosch. In near term, the earnings season and Karnataka poll results are likely to influence the market along with news flow on the trade war.