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Market Headstart: Nifty likely to remain under pressure; telecom, bank stocks to be in focus

February 17
09:06 2020

The Indian market is likely to experience weakness on February 17 in the wake of the Supreme Court’s move on AGR, while coronavirus’ impact on the global economic growth remains an overhang.

Asian shares stepped back from three-week highs on Monday as investors weighed the near-term hit on global growth from a fast-spreading coronavirus outbreak in China, although expectations of further policy stimulus helped stem losses, reported Reuters.

“Coronavirus is still dominating as a key factor in the global market and it will continue to remain a dominant factor for the next week as well. Q3 earnings season has almost end where the movement of the global market will have a major impact on the Indian market,” said Santosh Meena, Senior Analyst, TradingBells.

Trends of Nifty futures at Singapore Exchange also indicated a negative start for the Indian market. SGX Nifty was down 8 points at 12,122 around 07:45 hours IST.

The Indian equity benchmarks, Sensex and Nifty, fell below 50-day moving average on February 14 as investor sentiment weakened further after the Supreme Court ordered telecom players to clear their dues to the government by March 17.

Sensex ended 202 points, or 0.49 percent, lower at 41,257.74 while Nifty finished with a loss of 61 points, or 0.50 percent, at 12,113.45. With this, both extended their losses into the second consecutive session.

Last week, Sensex and Nifty gained 0.3 percent and 0.1 percent, respectively.

The Supreme Court’s stance on AGR dues weighed on financial stocks also because of their exposure to the sector as it will impact the asset quality of banks having decent exposure in the sector. Experts are of the view that bank stocks will remain under pressure given high inflation and a feeble possibility of a rate cut by RBI in the near-term.

The flow of foreign funds will also have a say on the mood of the market. FPIs sold shares worth Rs 704.92 crore, while DIIs bought shares of worth Rs 219.54 crore in the Indian equity market on February 14, provisional data available on the NSE showed.

So far, foreign investors have remained net buyers in the first half of February by investing a net sum of Rs 24,617 crore in the Indian markets.

As per the depositories’ data, FPI pumped in a net sum of Rs 10,426 crore into equities and Rs 14,191 crore into the debt segment between February 3 and 14. This adds up to a total net investment of Rs 24,617 crore.

FPIs have been net buyers in the Indian markets since September 2019, the data showed.

Big News:

SBI Chairman Rajnish Kumar on February 15 said banks will “have to pay the price” in case any telecom firm files for bankruptcy, a day after the Supreme Court made it clear that telecom companies will have to pay the Rs 1.47 lakh crore in past dues.

The chief of the country’s largest lender State Bank of India (SBI) said it is in the “wait-and-watch mode” and the onus of ensuring telecom companies’ compliance with the Supreme Court order lies with the Department of Telecommunications (DoT) under the government, PTI reported.

Stocks in the news:

Realty major DLF is looking to raise Rs 2,000 crore through monetisation of certain commercial land parcels to its existing joint venture partners or new partners.

Debt-ridden telecom operator Vodafone Idea on Saturday said it is assessing the amount that can be paid towards AGR dues, even as it flagged concerns over the continuation of its business, reported PTI.

Bharti Airtel has told DoT that it will deposit Rs 10,000 crore by February 20, following the Supreme Court ruling that required telcos to pay their adjusted gross revenue (AGR) dues.

Oil and Natural Gas Corporation (ONGC) posted a 49.75 percent year-on-year (YoY) fall in standalone profit at Rs 4,151.63 crore for the quarter ended December 31.

Technical View:

Nifty consolidated for the second day in a row to form a bearish candle. It slipped below its crucial 50-DMA placed at 12,126 on daily charts.

Nifty formed a Doji candle on a weekly scale while a Bearish candle on a daily scale which indicates a tug of war between Bull and Bears with some supply at higher zones.

As long as Nifty holds above 12000 levels, we may see ongoing optimism with a consolidative move towards 12,250 levels, suggest experts.

India VIX moved up by 1.83 percent at 13.61 levels.

Three levels: 12,092 | 12,247 | 12,272

Maximum call OI: 12,500 | 12,400

Maximum put OI: 12,000 | 11,800

Technical Recommendations:

We spoke to Angel Broking and here’s what they have to recommend:

Sun TV | Buy | LTP: Rs 497 | Target price: Rs 542 | Stop loss: Rs 470.20 | Upside: 9%

Lupin | Buy | LTP: Rs 719.50 | Target price: Rs 745 | Stop loss: Rs 702 | Upside: 4%

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