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Stock Market: Take Stock Specific Trading Approach

Considering the scenario, we suggest maintaining a positive yet cautious approach and continuing with the stock-specific trading approach. Also, keep a close watch on global markets and earnings announcements for cues.

Photo Credit :

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Dear Trader…

The bulls continued to dominate and posted noticeable gains, due to upbeat global cues and the monsoon being very successful in the country this year, high growth in agriculture and rising vehicle purchases in rural areas, the festive season is now expected to see more stimulus packages by the central government and funds in the cities.

On the front of COVID-19 cases, India has done better in comparison to most countries as the mortality rate in the country remained low and the recovery rates were high.

This month will be good as far as inflows of FII are concerned. There is a general view that if Biden becomes the president, there will be more correction in the dollar index which will help flows coming into the emerging markets now, the US Fed will be in focus. Bond yields, dollar and rates may remain lower which will help emerging markets. This also seems to have given confidence to foreign investors.

India's weight in MSCI will go up. That is supposed to cause an inflow of about $3 billion. Morgan Stanley Capital Investment (MSCI), a leading provider of research-based indexes and analytics, will tweak the foreign ownership limits for India stocks in its global indexes from December 1, a move that could see passive inflows of $2.5 billion into the country.

We will implement changes in foreign ownership limits in the MSCI Global Indexes containing Indian securities coinciding with the November 2020 Semi-Annual Index Review (SAIR) at the close of November 30, effective December 1, 2020, MSCI said in its statement.

While MSCI weight remains a factor, strong September quarter earnings, improving macroeconomic factors and weakness of dollar index are also signaling FII inflow into the Indian market may sustain.

Economic activity is picking up again. The volume of e-way bills has also increased significantly and exports have also increased. GST collection is also coming on a positive track. India's factory activity was at a 13-year high in October. 

There was a strong recovery in demand and production from the corona virus disruption it is important that all of these signals last a long time. The central government is making every effort to save the country's economy from the Corona crisis, with rising credit growth figures and corporate India's second-quarter results coming to an end in September 2020 amid growing industrial recovery in the country.

One important thing is that the countries against which Trump took drastic action, their markets could not perform. For example, China's Shanghai Composite Benchmark has improved by only 4% in four years. Russia's RTS also showed a modest improvement of 14%. However, European markets also failed to show high returns for reasons such as low economic growth. The UK's Fusty is among the worst performers with a negative return of 14%.

Friends, India’s economy is showing signs of improvement despite lesser stimulus. However, the body language of the government has been ensuring that it will take measures to keep the economy up and running.

Equity markets are looking through the short-term noise and are assuming that whoever gets in. We are going to see another wave of stimulus to come. Traders should have a good weight in sectors that have done well during the COVID period. A lot of factors, including better-than-expected quarterly numbers, Fed's softer stance and improving economy, appear to be playing in favor of Indian markets.

The way the benchmark indices have surged of late, it seems that participants have already priced in the possibility of a clear winner in the US elections. Considering the scenario, we suggest maintaining a positive yet cautious approach and continuing with the stock-specific trading approach. Also, keep a close watch on global markets and earnings announcements for cues.

Dear Traders…. For the Trading Idea of…

  • Nifty Future closed @ 12261 as on 06.11.2020

Nifty Future has resistance at 12303 – 12333 Point; above which other resistance levels are at 12373 – 12393 Point with highly Volatile Trend,

Nifty Future has Downside support levels are at 12230 – 12202 Point; below12202 Point, other support levels are at 12160 – 12122 Point.

I am positive for the next bullish trend only above @ 12373 Point but be with the trend. Let the market decide further moves. 

As we are saying from many days, Buying is suggested in falls only...and it’s still a better strategy in the given Scenario...!!!

Regarding Long term positions, it is preferable to remain cautious now

If Nifty Future crosses @ 12373 Point, again then the upper side target is quite high and it may touch @ 12404 Point in the short term

  • Bank Nifty Future closed @ 26750 as on 06.11.2020

Bank Nifty Future has resistance at 26808 – 26888 Point; above which other resistance levels are at 26909 – 27007 Point with highly Volatile Trend,

Bank Nifty Future has Downside support levels are at 26676 – 26606 Point; below26606 Point, other support levels are at 26533 – 26474 Point.

I am positive for the next bullish trend only above @ 27007 Point but be with the trend. Let the market decide further moves. 

As we are saying from many days, Buying is suggested in falls only...and it’s still a better strategy in the given Scenario...!!!

Regarding Long term positions, it is preferable to remain cautious now

If Bank Nifty Future crosses @ 27007 Point, again then the upper side target is quite high and it may touch @ 27077 Point in the short term

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Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Nikhil Bhatt | Research Analyst - SEBI

The author is a well established entrepreneur having a more than 16 years of experience in the field of stock market and financial management.

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