“NIFTY IT” MAY CONTINUE TO OUTPERFORM BANK NIFTY TO HIT 52000 THIS WEEK

 

Dated: 17/08/2024

“Nifty IT” & Bank Nifty has been master of the markets last week pushing Nifty ahead towards our most desired target of 24700 which though didn’t came fully but the push with both the sectors on last Friday did push it closure towards this by making high’s of 24563.90 to give a decisive close at 24541.15 last week.

Nifty managed to give bullish closing with Morning Star kind of pattern on Weekly charts giving bulls once again a hope that they could rule the Dalaal Street with their swords naked & creating a butcher house for the bears. Nifty if this time sustains above 24700 will have possibility of hitting 25000 this time but that may not be too easy as it seems.

The expected upside this time in Nifty could possibly be supported by several different sectors support jointly & the upper line of 25000 can only be possible with join efforts of several heavy weights like Reliance, HDFC Bank & TCS etc. This won’t be an easy task this time but the joint effort is the only thing which can lead this thing to the event horizon but with lots of volatilities & hiccups.

In the wholesome broader markets witnessed some key events & their outcomes last week which are described as follows:

1. GST Collections: India’s GST collections for July 2024 stood at approximately ₹1.65 lakh crore, reflecting strong economic activity. This figure marks a year-on-year increase of over 10%, driven by robust domestic consumption and improved compliance.

2. Trade Deficit: India’s merchandise trade deficit widened to $23.5 billion in July 2024. This was due to a decline in exports to $33.98 billion from $35.20 billion in June, while imports rose to $57.48 billion from $56.18 billion in the previous month. The widening trade deficit has raised concerns about India’s external economic stability.

3. Regulatory Updates: The RBI introduced new guidelines to enhance transparency in digital lending and ensure consumer protection. This move aims to curb malpractices and increase confidence in the digital lending ecosystem.

4. Deposit Withdrawals: NBFCs must allow depositors to withdraw their full deposit amount within the first three months if requested due to emergencies like critical illnesses or government-declared calamities. However, these withdrawals will not accrue any interest. For non-emergency situations, depositors can withdraw up to 50% of the deposit or Rs 5 lakh, whichever is lower, without interest.

5. Maturity Notification: The RBI has shortened the notification period for deposit maturities from two months to 14 days. NBFCs are now required to inform depositors of the maturity details within this new timeframe.

6. Housing Finance Companies (HFCs): The RBI also reviewed regulations for Housing Finance Companies, including requirements for maintaining liquid assets and providing full cover for public deposits.

International

1. Global Trade: The World Trade Organization (WTO) had earlier predicted a recovery in global merchandise trade for 2024, following a downturn in 2023 caused by high energy prices and inflation. However, challenges remain due to ongoing geopolitical tensions and fluctuating global demand.

2. US Federal Reserve: The US Federal Reserve hinted at the possibility of further interest rate hikes to combat persistent inflation. This has led to volatility in global financial markets, as investors anticipate tighter monetary policy.

Meanwhile in “Nifty IT” our crucial support range / buying range still intensifies a crucial significance as it continues to play pivotal role & the index has shown bounce from those levels several times. With expectations of continuous outperformance by “Nifty IT” this time the upside potential in August series would continue to remain at 43000 magnificent mark. However, we have already raised our positional target of 53000 in “Nifty IT” till March 2025 with volatilities in between the roads ahead & the second half of the 2024 is going to be of “Nifty IT” broadly. In the between the heavy weights like TCS Infosys & Wipro may continue to remain into focus.

Advance tax collection in FY till June 15 surged 27.6% to ₹1.48 lakh crore, with ₹1.14 lakh crore as corporate tax and ₹34,362 crore as personal income tax, indicating a strong economy and corporate performance.

The Centre’s gross tax collections (post refunds but before transfers to states), stood at Rs 4.6 trillion in the first two-months of the current financial year, 15.9% higher than the year year-ago level, data released by the Controller General of Accounts (CGA) showed on Friday. This is against 10.6% annual growth pegged in the Budget for FY25.

Net tax revenue (after refunds and after devolution to states) during April-May, stood at Rs 3.19 trillion, accounting for 12% of the Budget estimate of Rs 26.02 trillion. However, during the same period of FY24, net tax revenue had accounted for about 16% of the Budget target.

Institutional players were net biased on each factors last week. When FII’s continues to remain in net outflow category with net outflow of nearly Rs.6,616.43 cr. last week while DII’s continued to remain net buyer’s with net further inflow of Rs.10,560.08 cr.

Nifty last week terrified the investors / traders with its highly volatile move but eventually bullas caught up made highs of 24563.90 to give a close of 24541.15 with marginal low of 24099.70 with net positive closing of 238.30 points i.e. up by almost 0.98% for the week. However, Nifty managed to make morning star candlestick pattern on weekly charts which represents that adamant bulls could once again rule the Dalaal Street & bears may once again run for cover. As Nifty is poised for an upside potential towards 24700 & if sustain above this we could possibly get to see 25000 on the cards with crucial support lying at 24000-24200 kind of levels. However, the sector specific movement is highly likely to remain into the focus. On a specific sector remains sideways to highly bullish on Nifty IT (Bullish from 38000-36000 levels) with heavy weights like TCS Infosys & Wipro may continue to outperform the broader markets.

Sensex too has some weird volatile structure throughout the week but eventually bulls came to rescue traders / investors. The low formation was near to 78889.38 & high’s were near to 80518.21 to give a close at 80436.84 with net positive closing at 730.94 i.e. net gain of 0.91% for the week. However, on weekly charts the Sensex followed the same pattern as of Nifty by forming Morning star on Weekly charts. For the coming week ahead the crucial support now remains within the defined range of 78000-78800 with potential upside still remaining at 80900 / 82000 kind of levels. However, the sector specific movement is highly likely to remain into the focus. On a specific sector remain sideways to highly bullish on IT sector with certain dips in this market & heavy weights like TCS Infosys & Wipro may continue to outperform the broader markets.

Bank Nifty is biased to support the broader markets with its expected upside potential towards 52000-52500 kind of levels with earlier defined marginal crucial support range of 49600-50000 kind of levels. Unlike last week where private heavy weights outperformed this week Nifty PSU Banks like SBI & Bank of Baroda along with Nifty Private Banks like HDFC Bank are highly likely to outperform & certain mid-cap private sector banks like RBL Bank are likely to outperform the broader markets.

In Nifty Financial Services the crucial support now remains within the prediend range of 22500-22800 with upside potential towards the range of 23500-23750 kind of levels.

In “Nifty IT” the low’s of 38000-36000 has been tested & from there the heavy longs hopefully were created & is expected to hit 43000 mark in August series itself & positionally the estimated possible target of 53000 mark by the end of March 2025. In fact the upcoming second half of the FY 2024-25 would be completely of “Nifty IT” sector boosting heavy weights like TCS, Infosys & Wipro etc. We have now upgrading our positional target in Nifty IT towards 53000 magnificent mark by March 2025 any cool off towards 38000-36000 remains an opportunity to add long heavy longs. Stay bullish in this sector with any marginal dip in the heavy weight counter like 5-7% would be an excellent opportunity to add up the longs.

Till March 2024 the number of Demat Accounts has risen to whopping 14.39cr. which not only helps the capital markets directly but also directly to Equity investments.

In the FY 2023-24 so far the Direct Tax collection has amounting to whopping Rs. 18, 90,259 cr. has seen the surge of nearly 19.88% as compared to its previous year collection of Rs. 15,76,776 cr. .

 

Brief Levels of Nifty / Sensex/ Bank Nifty / Nifty Financials / Nifty IT:

Nifty CMP:  24541.15
Nifty Immediate Target: 24700 / 25000 (As the case may be)
Nifty Immediate Support: 24000-24200

Sensex CMP: 80436.84
Sensex Immediate Target: 80900 / 82000 (As the case may be)
Sensex Immediate Support: 78000-78800

Bank Nifty CMP:  50516.90
Bank Nifty Immediate Hurdle / Target: 52500 / 54000-55000 (As the case may be)
Bank Nifty Immediate Support: 49600-50000

Nifty Financial CMP: 22976.20
Nifty Financial Crucial Target: 23500-23750
Nifty Financial Crucial Support: 22500-22800

Nifty IT CMP: 40878.25
Nifty IT Potential Upside: 43000 / 53000 (As the case may be)
Nifty IT Crucial Supports: 38000 -36000

 

Stock on Radar:

Large Caps:

• RVNL (CMP 571): This large-cap railways counter may get an inflow of $220 million in its recent MSCI rebalancing on 30^th August 2024 which makes this a hot counter at CMP 571 with strict SL at 500 for an estimated possible upside of 640 in 30 days time frame.

• IREDA (CMP 240): This power sector PSU counter looks good to add on dips towards 220 with strict SL placed at 200 for an estimated possible upside of 280-320 in 2 months time frame.

• Larsen & Toubro (CMP 3575): This infra sector giant looks good to add here at CMP 3575 with strict SL placed at 3450 for an estimated possible upside of 3800 this month itself.

• IRCTC (CMP 924): This large cap railway almost monopoly contender looks good to add here at CMP 924 with strict SL placed at 860 for a potential upside target of 1200 in 2 months time frame.

• PFC (CMP 504): Another PSU large cap counter with good closing on last Friday one can accumulate here at CMP 504 with strict SL placed at 480 for a potential upside of 550-580 in 1 month time frame.

• Aditya Birla Capital (CMP 216): This large-cap NBFC counter is peer to Jio-financials & has last week posted fantabulous results from there some profit booking was seen lately. It looks like dusts have been settled down & some cheer could come up. It has been on our radar since subdues levels of 212 & still one can accumulate here at CMP 216 with SL placed at 190 for an estimated potential upside of 270 in 3 months time frame.

• SBI (CMP 812): Last week we were short on SBI & it did exactly what we predicted now it seems to be bottoming out & do some wonders from here onwards. One can accumulate here at CMP 812 with SL placed at 800 one can expect a potential upside of 900 in 2 weeks time frame.

• Jio Financials (CMP 328): This large-cap counter has been on our radar since subdued levels of 320 & still can be added here at CMP 328 with strict SL placed at 300 one can expect possible target of 420 in August series itself.

• Wipro (CMP 516): This IT giant has been on our radar since 445 levels from there it has already tested 575 & shown some correction lately due to results effect. This counter still looks hot to add here at 516 with strict SL placed at 470 for an estimated possible target of 550-575.

• HDFC Bank (CMP 1632): This large cap private banking counter looks good to accumulate here at CMP 1632 with strict SL placed at 1580 for an estimated possible upside of 1700.

 

 Mid- Caps:

• Happiest Minds (CMP 766): This mind-cap IT counter looks good to add here at CMP 766 with strict SL based at 700 for a potential upside towards 866-999 within 3 months time frame.

• Infibeam Avenues (CMP 31.14): Another mid-cap IT counter looks attractive at CMP 31.14 with strict SL placed at 25 one can expect a potential upside of 40 in no time.

• KRBL (CMP 293): This rice sector giant has been on radar from 268 levels. This still looks attractive at CMP 293 with strict SL placed at 250 one can expect an upside potential of 427 in 3 months time frame.

• RBL Bank (CMP 207): This mid-cap banking counter has been on correction mode lately but posted excellent results. This looks attractive at here CMP 207 with strict SL placed at 200 for an estimated possible target of 270-320 in 6 months time frame.

Small / Micro Caps:

• K&R Rail Engineering Ltd. (CMP 464): This small cap counter has shown strength despite volatility in the global markets. This counter looks hot to add here at CMP 464 with strict SL placed at 430 for an estimated possible target of 575 in this month itself.

About the Author:

Mr. Vishal Gupta a SEBI Registered Research Analyst is the founder of “VG STOCK RESEARCH”, founder of “THE ANALYSIS ROOM”, a writer & an advisor having rich experience in Indian Equity Markets who has spent years comprehending an industry wide shift and risk management with more than 12+ years exploring in depth analysis of the Equity & Derivatives with accuracy of 90% and above.

He has also been into teaching Fundamental Analysis for quite some time giving investors/traders comprehensive knowledge & skills of Indian Equity Markets.

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