Early on D-Street | Hold long positions with stop loss below 11,400 on closing basis

A volatile day for Indian markets bulls managed to regain their hold on D-Street. The final tally on D-Street – the S&P BSE Sensex rose 112 points to 38,618 while the Nifty50 added 40 points to close at 11,469 which is higher than Tuesday’s intraday high of 11,462.

Experts suggest buying on dips with support of 11050. Traders are advised to hold long positions, if any, with a stop below 11400 on a closing basis, suggest experts.

Broader markets underperformed with both BSE Midcap and Smallcap index ending on a flat note. Sectoral indices exhibited a mixed trend.

Market participants would keep a close watch on trade talk developments between the US and China, currency and crude oil price movement. And, September quarter earnings.

The earnings season is likely to gain momentum as some of the front liners would be declaring their results in the next few days. Over 40 companies will declare their numbers for Q2 in the next two days which include names like – TVS Motor, L&T Infotech, ZEE Entertainment, RIL, Ambuja Cement, PVR, etc. among others.

Sectorally, the rally was seen in the S&P BSE Oil & gas index which rose 1.2%, followed by the Realty index which gained 1.09%, and Energy stocks rose nearly 1%.

On the losing front, the S&P BSE Power index was down 1.06%, followed by the Metal index which fell 0.42%, and the Capital Goods index fell 0.27%.

The slowdown fears are here to stay. Amidst the deepening slowdown across the economy, commercial credit demand has contracted 2.6 percentage points to Rs 63.80 lakh crore in the June quarter, says a report.

The contraction has been across all the four segments of the commercial credit segment, including micro, small, medium, mid and large enterprises, a joint survey report by the state-run Sidbi and Transunion Cibil said Wednesday.

More than 300 stocks hit fresh 52-week low which includes names like PNB Housing, Dhanuka Agri, Va Tech Wabag, Indiabulls Housing Finance, Rushil Décor, etc. among others.

The rupee recovered from initial losses to settle 11 paise higher at 71.43 against the US currency on Wednesday, tracking gains in domestic equity markets and softening crude oil prices.

On the institutional front, FPIs were net buyers in Indian markets for Rs 686 cr while DIIs were net buyers to the tune of Rs 1576 cr, provisional data showed.

Big News:

As many as 21 companies will declare their results for the quarter ended September which includes names like DHFL, Force Motors, L&T Infotech, PVR, South Indian Bank, TVS Motor, ZEE Entertainment, etc. among others.

ZEE Entertainment: PAT likely to grow by 30% YoY

TVS Motor: PAT likely to fall by 27% YoY

PVR: PAT likely to grow by 30% YoY

(All the estimates are from Motilal Oswal)

Technical View:

The Nifty50 made a Doji Cross kind of pattern on the daily charts

The good part is that Nifty closed above its 5-Days EMA, and 100-DMA on a closing basis

MACD has given a bullish crossover on the daily charts which is a positive sign

The last time when MACD gave a bullish crossover was on 20 September. The index inched closer towards 11700 levels during that phase before heading towards 50-DMA at 11,102.

Three levels to watch on Thursday: 11400, 11,481, 11554

The fear indicator, India VIX slipped 3.4% to close at 16.27

Max Call OI: 12000, 11500

Max Put OI: 11000, 11400

As long as Nifty holds above 11400 – a rally towards 11550-11600 is possible

Traders are advised to hold long positions, if any, with a stop below 11400 on a closing basis, suggest experts.

Stocks in news:

Mindtree's Q2 FY20 consolidated net profit rose 45.6 percent quarter-on-quarter to Rs 135 crore on the back better operating income.

Media group DB Corp on Wednesday reported a 63.6 per cent increase in consolidated net profit at Rs 75.57 crore in the second quarter ended on September 30, 2019.

Reliance Industries in 24 months can become the first Indian company to reach $200 billion market cap on the back of its new commerce venture and fixed broadband business, Bank of America Merrill Lynch said on October 16.

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

Technical Recommendations:

We spoke to Bonanza Portfolio and here’s what they have to recommend:

Godrej Consumer Products: Buy| CMP: Rs.706| Target Rs: 766 |Stop Loss Rs.670|Upside 8.50%

Finolex Industries Ltd: Buy| LTP: Rs 599.55| Buy range 580-570| Target: Rs 638|Stop Loss Rs 550|Upside 6%

Exide Industries: Sell| LTP: Rs 182.95 | Target Rs: 167|Stop Loss: Rs 192|Downside 8%

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.