Last week – review
As expected, volatility reduced significantly compared to last week which was highly eventful due to budget and central bank’s meeting. RBI MPC increase rate by 25-bps by 4-2 count, 2 members in favour of less or no rate hike. ADANI group stocks continue to remain volatile as MSCI reduce weightage on 4 ADANI group stocks.
Approach on Technical: Indices this week has been trading around 20-DMA and narrow range, we expect clear trend in next week.
Nifty above 17897 & Banknifty above 41999 could open upside on Nifty to 18201 & Banknifty could test 43078. Indices could see major downside risk only if Nifty breaks 17593 & Banknifty below 40861. Our strategy would be play on long side above Nifty @ 17897 & Banknifty above 41999 break-out convincingly.
Fundamental Insight
1) RBI MPC hikes rate by 25-bps – Decision by 4 – 2 in favour of rate hike
2) IIP: India’s Industrial Output Expands 4.3% In December
3) India’s Forex Reserve Drops $1.49 Billion To $575.27 Billion
4) MSCI Changes Free Float Of Four Adani Companies
Market View & Strategy
We would continue to follow strategy to keep exposure around 65 – 75% and would do further allocation in coming weeks on positive sign. Currently market is trading in narrow range where fresh cues will be critical to provide positive or negative trigger. This week would focus on US economic data which are trending downwards.
Union finance budget is positive for market, but sentiment was turned negative due to ADANI group stocks and global uncertainty. We do not expect any major directional move on either side as quarterly result are in-line with no major surprise. We would wait for upcoming data to continue to remain optimistic.