Market Headstart: Nifty likely to consolidate around 12,100 on the F&O expiry day

The Nifty50, which reclaimed 12,100 levels on January 29, could well consolidate around these levels on January 30 amid muted trend seen in other Asian markets.

Asian stocks slipped while gold and bonds were in demand on Thursday as worries about the spread of a new virus from China sent investors heading for safety.

The Federal Reserve kept interest rates unchanged on Wednesday, as expected, although bank Chairman Jerome Powell’s comments about a low inflation outlook added to U.S. government bonds’ appeal, said a Reuters report.

Trends on SGX Nifty indicate a flat opening for the Indian benchmark, with a 14 points, or 0.12 percent, loss. The Nifty futures were trading around 12,119-level on the Singaporean Exchange.

The market is likely  to remain volatile as traders would roll over their bets from the current January series to the February series.

"We expect volatility swings to continue, thanks to upcoming events. The rollover and unwinding of derivatives positions on Thursday would keep the traders busy. Besides, several stocks from the Nifty 50 basket are going to announce their results in the next two days," Ajit Mishra, VP - Research, Religare Broking told Moneycontrol.

"Above all, the Union Budget which is scheduled on Saturday i.e. Feb 1 is one everyone’s radar. In short, traders should prepare themselves for a roller-coaster ride. We advise focusing more on risk management aspects in such a scenario and preferred stocks that are trading in tandem with the benchmark," he said.

Markets witnessed marginal recovery after two days of decline and settled with modest gains. Let’s look at the final tally on D-Street – the S&P BSE Sensex rose 231 points to 41,198 while the Nifty50 rose 73 points to close at 12,129 on Wednesday.

Sectorally, the action was seen in FMCG, Capital Goods, Metal, and Auto index while profit taking was seen in the consumer durable index.

The broader markets underperformed as the S&P BSE Smallcap index was up 0.12 percent while the S&P BSE Midcap index was up 0.49 percent.

The rupee on Wednesday appreciated by 7 paise to settle at 71.24 against the US dollar following gains in the domestic equity market.

On the institutional front, FPIs were net sellers in Indian markets for Rs 1014 cr while the DIIs were net buyers to the tune of Rs 1520 cr, provisional data showed.

Big News:

As many as 75 companies on the BSE will declare their results for December quarter that include names like Amber Enterprises, Bajaj Auto, Bharat Electronics, Colgate Palmolive, Dabur India, Equitas Holding, Force Motors, Bharti Infratel, IOC, LIC Housing Finance, Marico, MCX, Strides Pharma, Tata Motors, and TTK Prestige etc.

Tata Motors: Likely to register a net profit of Rs 1114 cr

LIC Housing Finance: PAT likely to grow by 15% YoY

Bharti Infratel: PAT likely to grow by 20% YoY

(All estimates are from Motilal Oswal)

Technical View:

Nifty formed a small bodied candle on the daily charts

It closed above its 50-Days EMA placed at 12088 but below 50-DMA placed at 12,131

Pre Budget rally could get capped near 12200 levels going by options data

Volatility likely to rise ahead of F&O expiry, suggest experts

If Nifty manages to sustain above 12170 levels then it should ideally head towards 12272 levels.

Similarly, on the downsides, 12024 shall remain critical support breach of which shall drag down the indices towards 11900, suggest experts.

Three levels to track – 12103, 12169, 12200

Stocks in the news:

P Birla Group flagship company Birla Corporation on January 29 reported a 200-per cent on-year rise in net profit to Rs 81 crore in the quarter ended December.

IT company NIIT Technologies on January 29 reported a 66.29 percent jump in its consolidated profit at Rs 123.3 crore for the third quarter ended December 31, 2019.

Bajaj Finserv on January 29 reported a 32 percent year-on-year (YoY) growth in consolidated profit at Rs 1,126 crore for the December quarter of the financial year 2020.

Technical Recommendations:

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

BPCL | Buy | LTP: Rs 478.65 | Target: Rs 510 | Stop loss: Rs 460 | Upside: 6.55%

Birla Corporation | Buy | LTP: Rs 750 | Target: Rs 820 | Stop loss: Rs 710 | Upside: 9.33%

Ircon International | Buy | LTP: Rs 483.30 | Target: Rs 527 | Stop loss: Rs 460 | Upside: 9%

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