DStreet sizzles on Friday with rare gain in Covid marred week, has NaMo's talk and SEBI's relief worked?

Source : Sify
Author : Finance Desk
Last Updated: Fri, Mar 20th, 2020, 17:28:25hrs
DStreet sizzles on Friday with rare gain in Covid marred week, has NaMo's talk and SEBI's relief worked?

Equity indices in the country notched up a rare to spot intra-day gain in the times of Coronavirus. The BSE Sensex was up by 1627.73 points or 5.75% up in intra-day session to settle at 29,915.96. The fifty scrip sensitive Nifty50 settled at 8,745.45, up by 482.00 points or 5.83 percent up.

Most indices ended in a range of 2.5 to 5 percent. Oil & Gas and Metal scrips rose by 7-9 percent in intra-day trade on the BSE. IT & Energy stocks also saw good buying momentum.

An addition of Rs 6.33 lakh crores was witnessed on Friday's trade. The market capitalisation of BSE listed companies stands at Rs 116.09 lakh crores as on end of trade on Friday, this is from 109.76 lakh crores recorded a day ago.

On the Sensex, baring IndusIndBank and HDFCBank all stocks were trading in the green. ONGC, Ultratech Cement, HIndustanUnilever, and Reliance saw good momentum on their counters.

Overall the session was different than the previous sessions of marauding and sagging investor wealth. The resumption also gives confidence to investors who have seen Sensex crash from levels of 42,000.

On Thursday's trade, Gold rates too saw a momentum. Gold rates across several cities of India soared in varying margins. For city-specific rates visit Sify Gold. On MCX, Gold futures were up by 2.47 percent or 984 points at Rs 40,815.

Although the fear from the Pandemic of Coronavirus is yet to slip, Prime Minister Narendra Modi in a televised brief asked the nation to stay cautious. His message - "Friends, during such a pandemic, only one mantra can take us through: Hum swasth toh jagat swasth (The world will be healthy if we stay healthy)." The full speech can be read here.

Another positive outcome on Thursday was market regulator SEBI offering a relief to companies by extending timelines for firms to announce Q4 results.

Brokerage View:

Deepak Jasani Head of Retail Research at HDFC Securities in his note suggests that any bullish trend could be limited. "Technically, while the Nifty has bounced back, the short term trend remains down. The Nifty could resume its downtrend if the immediate support of 8502 is broken. Any pullback rallies early next week could find resistances at 8883-9128," he adds.

But, have the markets bottomed out? Santosh Meena from TradingBells explains, "It is tough to say about the bottom of the market but instead of one-shot buying, investors should go with fractional buying in good quality stocks. Technically, Nifty has an important support area of 8400-7900 because 8433 is 100-Months simple moving average and in 2008 market made a bottom at 100-Months average whereas 7900 is low at the time of demonetization. On the daily chart, Nifty has formed a kind of morning star candlestick pattern which is a ray of hope that the market has made bottom but it is very difficult to say about the bottom with confidence because levels have become meaningless in current uncertainty. In the upside 9000 will act as an immediate resistance; above this, we can expect a rally towards 10000 level while in the downside 7350-7250 will be the next support area."

Meena adds on sector specifics such as pharma and healthcare. He says, "If we talk about the sector then the healthcare sector is looking very attractive to us because it is showing relative outperformance in the current market fall and the Pharma sector may witness positive return this time after four years of a downtrend. Coronavirus event comes out as the biggest lesson for the world where all the countries around the world are likely to spend more on health care budget which is the main reason for the attractiveness of the healthcare sector. The US  which is a major market for Indian pharma companies has already announced some measures and there is a possibility of more announcements in the future.  In terms of stocks Divis Lab, Dr Reddy, IPCA Lab, Aurobindo Pharma, Apollo hospital, Thyrocare, Metropolis, and Lal Path labs are out top pick in the healthcare space."

Amar Ambani, Sr President of Yes Securities in a note said, "The age-old maxim, 'Be greedy when others are fearful', applies to the current situation as well. This is the best buying opportunity that has presented itself since 2008-09. However, one can invest at these levels provided 1. one can set aside 3-5% cash for emergencies, 2. One is willing to digest further short-term drawdowns, 3. One is willing to stay invested for a minimum of three years, and 4. the asset allocation leaves room for further stock investments. If any of the above do not apply, then there is no rush to buy now. The market could stay irrational longer than we presume. The Nifty can head lower before it finally bottoms out and it is also possible that we remain in sluggish territory for many months this year."

He also adds, "Coming to stock selection in the present environment, the keyword is elimination. For direct equity purchase, avoid sectors with global supply-chain linkages like automobiles and those linked to travel restrictions like airlines, amusement parks, casinos and hotels. Some of these players may need to be bailed out by the time the crisis is over. Leave out stocks linked to Oil and Chinese markets at this point. Also, foreign fund and ETF outflows have made large caps with high P/E multiples of 60-100x significantly risky."

On the currency front, Rahul Gupta, Head of Research at Emkay Securities offers a crucial observation in his note. Gupta writes, "Globally, all central banks including RBI are trying to reduce the risk and loosen the tight liquidity however the increasing number of coronavirus cases in India will keep rupee on an edge. Until 74.50 area holds on dip in USD/INR, price will extend rally towards the record low of 75.30 which will act as a crucial resistance. A break of which can take spot towards 75.80-76 levels next week."

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