Buy on Dips Market Now, Outlook Steady

The Indian market witnessed 4^th straight session of gain after recovering from weakness lead by weak Q2 earnings and also weak GDP data. The FII selling has moderated and was seen buying in Indian equities to the tune of 3664 cr on 3^rd December, pushed the Indian benchmark NIFTY index above the 24500 mark today, while settled with some profit taking, at 24467, up marginal 0.04% since the previous session’s close.

Today’s action in the market was mostly triggered by Banking Laws Amendment bill which passed in the Lok Sabha, pushed the PSU and Private Banks higher. The bank nifty index advanced over 1% while specific to PSU banks, the NIFTY PSU Bank index gained 2.25%. Gains was also seen in realty stocks with Lodha and Oberoi realty shares gained 6/07% and 5.22% respectively. Prestige estate shares rose over 2% while Godrej Properties gained over one percentage point.

The RBI policy meeting is the key event to look at from markets perspective with market players expecting no change in repo rate with sharp spike in inflation during October. There was also voice in the market expecting some ease of liquidity through a cut in Cash Reserve Ratio as Indian GDP in the 2^nd Quarter saw growth slowing to 5.4%.

A CRR Cut may be a strong positive for Banking, Auto, Realty and also for infra stocks for the short term. However, a dovish statement from the RBI regarding inflation may give room for rate cut in February meeting which may add buying interest in the broader market. 

Index Outlook

NIFTY:The index may stay sideways to positive as long as it holds the key 24350-mark, Today’s high 24571 may act as minor resistance as of now with immediate major resistance at 24800 levels. The short-term view remains a buy on dip with price target 24800.

Bank Nifty:After a sharp gain the index may face some strong resistance at 52300-52400 range and should witness some dips or correction. The 52700 and 52500 are strong support for the market as of now and any decline towards the support can be a buying opportunity.

Stocks Advice 

Godrej Properties: Buy for a target of 3100 with stop loss below 2800.

Grasim Industries: Buy for a target of 2780 for short term while investor can hold for long term with price target of 3200. Swing traders should maintain SL below 2660.

Indian Bank: Buy on decline towards 595-590 range for a target 630-640 with stop loss below 570.

The report is being prepared by Bitupan Majumdar, an independent SEBI registered research analyst with registration code INH30006962. Please consult your financial advisor before taking investment decision.