Market Khabar: Macro data to direct market movements

Aided by a string of positive policy announcements, stronger rupee, amendments to the Insolvency and Bankruptcy Code (IBC) and rationalisation of the rates of some products and services by the GST council helped markets snap two-week losing streak to close on a buoyant note. 

The benchmark indices the Sensex and the Nifty closed 336 points and 106 points higher at 33,679 and 10,389 respectively. Outperforming the benchmark indices the S&P BSE mid- and small-cap indices advanced 1.56 per cent and 2.38 per cent respectively. It is pertinent to observe that markets have logged gains for seven straight trading sessions. 

Over the weekend, S&P reaffirmed India’s sovereign rating and maintained the stable outlook, contradicting Moody’s that upgraded the country last week. The rating affirmation by S&P is cautious as there is a larger weightage accorded to the budget gap. Analysts expect this announcement to be a dampener for sentiment in near term. Crude prices advanced six of the past seven weeks to the highest levels since July 2015. However, it remains modest compared with the $100 prices of three years ago.  

Near-term trend will be dictated by the RBI monetary policy and Federal Reserve meet, international crude oil prices, macro data, auto sales numbers, FII investment pattern, F&O settlement and last batch of Q2 results. For the week ahead, chartists predict trading range of 33,250-34,150 and 10,250-10,535 for the indices. Support for the indices evident at 33,400 & 33,200 and 10,320 & 10,250. 

Stock Scan
TAJ GVK Hotels & Resorts is engaged in the business of owning, operating and managing hotels, palaces and resorts with brand name of TAJ. The company's business activities include the operations of rooms, restaurants and bars, banquets and others. Its properties include Taj Krishna, Taj Banjara, Taj Deccan, Vivanta by Taj, Taj Chandigarh, Taj Club House and Taj Santacruz. The Taj Krishna property is a five-star deluxe property with over 260 room inventory.  The company has been allotted around 7.5 acres land in Yellahanka, Bengaluru for the hotel project. 

With developments like announcement of the National Civil Aviation Policy, extension of the ‘Tourist Visa on Arrival  scheme’ to promote international inbound tourism, launch of the ‘Swachh Paryatan’ mobile app  and the ministry of tourism’s focus on driving tourism through branding and promotional campaigns, hospitality industry is poised to grow at an ‘incredible’ rate in coming days. Buy on declines for target price of Rs 275.

 ITD Cementation India is subsidiary of the Thailand based Italian-Thai development public company involved in construction and civil engineering. It is engaged in construction of a range of structures, which include maritime structures, mass rapid transport systems, airports and other foundations. The company operates in the construction segment. The Company has approximately 60 live operational sites across over 10 states. Reduced debt after restructuring and plans for QIP foretell good results from the company. Buy for medium term target price of Rs 325.

Futures & Options
Ahead of the settlement week, derivative segment continued to witness brisk trading activity. Sector rotation is likely to continue further. Track rollovers to spot winners of new series. Expect Nifty to rally towards short-term target of 10,600 in the coming weeks. The key level for trend change remains at recent low of 10,094. Punters tip 10,500 strike call option for unexpected gains. 

All the major sectors are supporting the ongoing rally. Sharp renewed buying was seen in IT stocks. Infosys attracted good buying interest; present rally with intermittent corrections may see Infosys touch Rs 1,300 in next few months. Range bound activity was seen in banking stocks. However, fallout of amendments to the Insolvency and Bankruptcy Code (IBC) for quicker resolution of NPAs is yet to be gauged. Importance of private sector banks is reflected in inclusion of InduSind Bank and Yes Bank in the BSE Sensex index replacing Cipla and Lupin. The changes will come into effect from December 18. Stay overweight in banking stocks, say observers. Renewed buying was seen in automobile stocks. Ahead of sales numbers, sharp buying was seen in Maruti and Bajaj Auto. 

With EVs gaining traction world over, analysts expect key changes in Indian market also. Buy on dips M&M and Maruti. FMCG companies were in focus as firms cut prices of products after the reduction in tax slab. Stay invested in Marico, Hindustan Unilever, Godrej Consumer and Dabur. Stocks looking good are Apollo Hospital, Colgate Palmolive, Godrej Consumer, GAIL, Kajaria Ceramics, NTPC, Syndicate Bank, Tata Power and Ujjivan.