Prashanth Tapse, Vice President (Research) at Mehta Equities Ltd is of the view that sectors like Power, Utilities, and capital goods are leading the recent rally due to hopes of high focus from the upcoming Union Budget 2022.
Prashanth Tapse, Vice President (Research) at Mehta Equities Ltd is of the view that sectors like Power, Utilities, and capital goods are leading the recent rally due to hopes of high focus from the upcoming Union Budget 2022.
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Q) Despite a muted Friday, Indian markets closed with gains of over 2% in the week gone by.What led to the price action on D-Street?
A) On Friday, the Nifty50 staged a smart recovery in the later session amidst bargain hunting that was backed by short covering.Technically speaking, there are lots of opportunities on the buy-side as long as Nifty stays above 17889 marks.
The immediate goal post on Nifty is seen at its all-time high at 18605.We have seen market dips being bought aggressively on the back of better than expected Q3 earnings reported by IT majors and Private Banks like HDFC Bank and high hopes from Union Budget 2022 keeping the market mood in green.
From the last few sessions, traders and investors are cornering all the negative news flows and building positions based on Budget events which can bring structural direction to the market.
Overall, we expect the Street would witness volatility reacting to global, and local events before moving to reconquer lifetime high mark, hence, we advise investors to trade carefully balancing good news and the bad news headlines.
Q) What are your expectations from markets for the coming week? Any important levels that investors should watch out for?
A) We see four big themes that still revolve around the uncertainties which linger investors in the coming week, including:
High hopes of better than expected Union Budget 2022
Rising Inflation concern
Sooner or later the Fed starts raising rates
Fear of faster spread of Omicron
Technically, we see a lot of opportunities on the buy-side as long as Nifty stays above 17889 marks with the biggest support seen at the 18057 mark from current levels of 18255.
Any close below the biggest support of 18057 can quickly take the index towards 17,514- 17,257 -16,940 in the worst-case scenario.
Q) In terms of sectors – Power, Utilities, capital goods led the rally.What led to the price action?
A) Sectors like Power, Utilities, and capital goods are leading the recent rally due to hopes of high focus from the upcoming Union Budget 2022.
We have seen every year govt hike 20-25% budgetary allocation to capital expenditure which keeps these sectors of interest in the trader’s zone.
Q) Can we say that we are in a pre-budget rally – what does the trend suggest?
A) Yes, we are in a Pre-budget rally as traders and investors are cornering all the bad news and buying all dips and focusing on budget hopes.
The Union Budget is one of the most keenly awaited events by industrialists and investors.If we go by historic trends, pre and post-Budget weeks have generally been strong market movements on either side, this time we are trending high towards new highs on high hopes.
In the last 7 years of NDA Government budgets — 4 times we have posted negative returns and 3 times markets have posted positive returns.
This time we are expecting constructive budget raising capital expenditure to revive the economy and create jobs considering the improving economy and better-than-expected tax collections via GST and other instruments.
Q) Greaves Cotton, Deepak Fertilisers closed the week with strong gains what led to the price action? And, what should investors do?
A) Greaves Cotton stock was in action in January-22 after the company’s EV arm Greaves Electric Mobility reported record-breaking growth of almost 6 times revenue growth in December-21 versus the same month last year and completing the acquisition of another electric 3-wheeler company MLR Auto (Teja brand), along with the launch of Ranipet mega EV factory, one of the biggest EV factories in the country.We have overall an optimistic view on EV space and expect more action seen in coming years.
Fertilisers stocks like Deepak Fertilisers were almost trending up on the back of high expectations to get focused on agri-economy in the Union Budget 2022 giving further impetus to the sector.
We have a positive view on the stock and can be a Multibagger candidate for 2-3 years investment horizon backed by incremental Capex in place to lead the future growth.
Q) What does D-Street expect from the Budget?
A) We have few hopes and expectations from upcoming Budgets 2022
a.
Increase sops to the manufacturing sector with a focus on Atmanirbhar Bharat & Make in India themes
b.
Focus on giving a boost to exports and curbing non-essential imports in order to control the trade deficit.
c.Divestment/Privatization of public sector enterprises and the roadmap for the IPO of Life Insurance Corporation.
d.Promoting the start-up ecosystem in the country would get better tax treatments.
e.Reductions in GST on raw materials in the sectors affected by Covid.
f.
More focus could be seen in healthcare sector
g.More sops towards EV and Renewable energy
h.Focus on more REITs and InvITs instruments
i.Regulations related Crypto-currencies
(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts.Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)
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