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technical analysis: Wait for recovery signs before entering FMCG, worst over for IT in short term: Astha Jain

Domestic equity markets cruised higher during the week on the back of supportive global cues and pain for IT stocks, at least in the short term it is over, believes Astha Jain, Senior Research Analyst, Hem Securities. She suggested one should wait to enter FMCG stocks. Read the edited excerpts:

The Nifty50 index ended the week with strong gains . What were the key reasons for this performance of the benchmark index and what is your outlook for it over next few weeks?
The Nifty 50 index ended 294 points or 1.68% up at 17,833 for week. The index witnessed a surge on the back of strong global markets coupled with falling crude oil prices. On the economic front, S&P Global India Services PMI Business Activity Index saw a jump from 55.5 to 57.2, indicating growth. Also buying from FIIs along with strong auto numbers led the indian indices to end in green territory in the week gone by. Going ahead, we believe the Nifty continues to carry its positive momentum & can witness a rise up till the level of 17,960-18,100 going forward.

What is your take on Nifty Bank which performed on similar lines during the week? Do you see outperformance in the coming days? If yes, then which are the banking stocks to watch out for in the near term?
Nifty Bank ended the week with gains of 2.5% or 994 points at 40,415 which shows clear outperformance by the index during the week. We expect the banking index to continue to perform positively in the near term with the Bank Nifty moving towards 40,800/41,300 levels. In banking stocks SBI,ICICI Bank &

are looking strong on charts. has shown an all-time high close above 550 level. The stock can be looked upon as positional buy at current level with price target of Rs 585/625 in near term. & Axis Bank are also looking strong on charts with price targets of Rs 940-1015 and Rs 815-855 levels, respectively.

On a technical front, what are the key support and resistance levels for the Nifty and Bank Nifty and what should be investors’ strategy to make best of it?
On technical front, Nifty is having major resistance at 17,960 & 18,110 levels while major support for nifty is seen at 17,780 & 17,630 levels. Bank Nifty can face major resistance at 40,800 & 41,300 levels while major support for Bank Nifty can be at 40,100 & 39,700 levels.

After a solid beatdown, IT stocks were back in form this week. Do you think the worst is over for them or there is more pain left? Suggest some IT stocks to look at.
On weekly charts, Nifty IT index has shown positive reversal after consecutive two negative close. Nifty IT index can show some more upside from current level till 30,500 in short to medium term. Hence, for time being or short term it can be said that pain is over for IT index & two stocks that look good in IT universe are

& L&T tech services.Tech Mahindra can be good buy with price target of Rs 1,196-1,230 while L&T Tech Services can move upto level of Rs 3,900-4,040 in medium term.

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Cement stocks have been strong performers in the last one month, delivering strong returns to the investors. Do you think that momentum is likely to continue? What are your best picks from the cement space?
Cement stocks have already performed strongly on bourses on back of drop in key input price petcoke along with increased demand from the infrastructure sector. In cement stocks buying on dips is recommended for at Rs 6,400-6,500 level with price target of Rs 7,500 in medium term.

Ahead of the much awaited festive season, FMCG and consumption themes are at the focus. Do you too buy this notion? What are your top picks from these sectors?
We would like to wait before making an entry into the FMCG space as some initial signs of recovery has started emerging with the cooling of raw material prices as well demand emanating from the rural sector on the back of normal monsoon & higher MSP but still would like to give some more time before making entry in this space. However, in FMCG space, stocks like are looking good on charts with an upside target of Rs 530/550 level in the medium term.

Which sectors do you think can be in flavour for the remaining 2022 and where you find value? How should investors approach them?
Going ahead, the Energy sector is looking strong on charts along with Infrastructure, consumer durables sector or banking sector. Buying on dips strategy can be adopted while investing in energy, consumer durables and Infrastructure stocks while buying at current level is recommended in banking stocks.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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