Riddhi Siddhi Share Brokers The Week Ahead: One eye on strong global stock markets and the other on increasing number of COVID-19 cases.
The way the stock markets are sky rocketing is a very positive quirk to most of the investors. But, amidst the pandemic backdrop, it is the strangest and the most unusual bullish action.
Well, it’s like being in a storm & the sun is shining.
Now, ahead of Unlock 1, India has recorded the highest-ever single-day spike in Coronavirus cases and COVID 19 deaths. In the last 24 hours, as many as 9,887 coronavirus cases and 294 COVID-19 deaths have been reported. In India, there are 1,15,942 active coronavirus cases. So far, 1,14,073 COVID 19 positive patients have been cured or discharged. As many as 6642 COVID 19 patients have died. There is a total of 2,36,657, coronavirus cases in India, as per the latest data shared by the Ministry of Health and Family Welfare. Perma-bulls need to spy with one big eye on how the government goes ahead with easing the lockdown in light of the record rise in infections.
But despite the above backdrop, we remain in the bullish camp and are quite positive on the markets near term trend as the technical have turned aggressively bullish with the recent sequence of higher high intact on daily and weekly time frames.
Appears bit flimsy, but investors at the moment are in a desperate mood to see the sunny side of Dalal Street.
**Also, commanding attention this week would be catalysts like:*
• The street will also closely eye arrival of monsoon. Timely arrival of monsoon is critical for agricultural production as will ensure kharif crops get sown properly.
• All anxious eyes will be on the US Federal Reserve’s two-day meeting, ending on Wednesday. This will be the first since April when Fed Chair Jerome Powell said the US economy could feel the weight of the economic shutdown for more than a year.
• The street is likely to be bullish about the Reliance Industries’ (RIL) latest deal. RIL’s seventh deal for Jio Platforms is likely to spill over to this week as well.
• Shares of Hexaware Technologies Ltd. hit the upper circuit Friday after the information technology company said its board will meet on June 12 to discuss the proposal of voluntary delisting of its equity shares.
• Last month, Eicher Motors announced stock split plan to make the stock more affordable for the small retail investors and increase liquidity. The said stock split is scheduled on Friday 12th June.
• Meanwhile, keeping upside capped at stock markets will be the rising crude-oil prices which now again seen flirting with the $38.95 barrel amidst supporting catalysts like gradual opening of global economies, lower inventories and reduced production capacities in the US, and ahead of further capacity cut from Saudi Arabia.
• The FIIs action and also the DIIs action at domestic bourses will also be keenly watched. The movement of USD/INR will also be tracked minutely. At the moment, concerns over coronavirus and the consequent economic distress are weighing on the rupee, which along with outflows from local equities may push the rupee to sub-77.50 levels soon. A lower rupee will make imports more expensive for India.
• On Friday, 12th June, the street will spy with one big eye on Manufacturing Output (MoM) (Apr), Cumulative Industrial Production (Apr), CPI (YoY) (May) & Industrial Production (YoY) (Apr) numbers.
From a chartist standpoint, Riddhi Siddhi Share Brokers call of the week suggests that the technical landscape for swing traders has improved considerably after the benchmark gained for past 2-week, indicating the worst is gone — at least with interweek perspective. The Sensex will now attempt to move nears 61.8% Fibonacci levels at 36,000 mark (20th Jan high to 24th March low)
So, technically, the most watched hurdles on Sensex/Nifty are at 36001/10600 mark respectively. Interweek supports for Sensex are placed at 31901 and then major supports at 29751. The corresponding levels on Nifty are at 9675 and then major supports at 9333 mark.
For perma-bull investors, the gyan mantra is to establish long positions only on any sharp panic fall to support levels indicates time to buy as there may be some specific buying opportunities emerging from all the panic.
Riddhi Siddhi Share Brokers Preferred trade for the week: Buying on corrective declines should be the preferred strategy.
Sensex (34287): Buy between 333251-33501 zone, targeting 35001 and then aggressive targets at 35901-36100 zone. Stop at 31611.
Amongst momentum stocks looking bright on any corrective declines are: MRF, DIVIS LAB, UNITED SPIRITS, DR REDDYS LAB, ADANI ENTERPRICES, ITC, BIOCON, SANOFI, ABBOTT INDIA, AAPL, GRANULES, HDFC LIFE, SUN PHARMA, HDFC LIFE, MGL, MANAPPURAM, MUTHOOT FINANCE, UPL and POLY MEDICURE.
Meanwhile, we are negative on stocks like: ASHOK LEYLAND, APOLLO TYRES, BANK OF BARODA, COAL INDIA, M&M FINANCE, M&M, PNB and ZEE ENTERTAINMENT.
Now, to the important Q4 earnings to trickle in this week:
• Monday: TITAN, PVR, INOX LEISURE.
• Tuesday: HEROMOTOCORP, BOMBAY DYEING.
• Wednesday: SRTRANSFIN, MGL.
• Thursday: SHRIRAM CITY UNION FINANCE LTD, SUNDARAM FASTENERS.
• Friday: M&M, HINDALCO, EICHERMOTORS, CASTROL.
• Saturday: DALMIA BHARAT, BHEL.
Before we end, Brokers most preferred pair strategies:
• Riddhi Siddhi Pair Strategy: Long MRF and Short APOLLO TYRES.
• Riddhi Siddhi Pair Strategy: Long SIEMENS and Short LARSEN.
• Riddhi Siddhi Pair Strategy: Long DIVIS LAB and Short GLENMARK.
#RIDDHISIDDHI #riddhisiddhisharebrokers