Mr. Mustafa Nadeem, CEO, Epic Research
Nifty closes the week on a positive note though fails to add any gain on weekly basis. Bank Nifty, Financials, Pharma lead while Auto, Metals and PSU continue to drag. It was a week of consolidation as Nifty was well within a range that has been in place for a second consecutive week. Despite the gains from heavyweights like Financials, Pharma, and Pvt. banks along with some muted gains from Energy space it was the laggards that capped the upside given the fact that they continue to post gains on the back of sector rotation.
Nifty is well supported at lower levels of 10650-10700. We have seen the base building before at crucial level of 10400 which was being sustained for almost a week to pull up for next rally. We have previously recommended creating long above 10800 and reiterate the same since recent consolidation will pave the way for bulls towards the higher target of 10950 - 11000.
It has been a muted month though the gains have been held on was lower levels were well supported by intermediate bulls. We have seen some value buying and recovery in pharma sector as most stocks are still available at attractive valuations, especially large caps in the sector. Energy Index on the back of buying has seen an addition of 4% and may continue to do well. In the short term, We remain bullish on the IT, Pvt. banks and Financials as they are leading this rally from the bottom formed in Q12018. FMCG may see some profit booking due to stretched valuations but they may see buying coming in at any reasonable correction.
All eyes are on the OPEC meet as we await the decision though some key developments may have been priced in the markets since Iran has been reluctant to participate in easing supply while it also pointed to unanimity in OPEC meet which is bearish sentiment for crude. Trade war fears have been there and may continue to make a space in the sentiments of markets. That being said, Markets have now adjusted to developments of Trade war and it is now not seen as a risk on market but basically on sectors that are directly affected by it. Metals is something which is affected very much by it and should be avoided for short term.
We maintain the buy on dips as strategy with 10900 - 10950 being next spot for Nifty.