Nifty should hold 16666 to head towards 17000, geopolitical tensions continue to hit D-St; check stocks to buy

Nifty should hold 16666 to head towards 17000, geopolitical tensions continue to hit D-St; check stocks to buy

By Rahul Shah

The Sensex has fallen nearly 2000 points in the previous week close on account of geopolitical tensions, as Russia begins military operations in Ukraine. The geopolitical event has been causing a rout across equity markets, as the world can ill-afford further disruption in trade and commodities when Covid has already weakened sovereign balance sheets. The Russia-Ukraine issue added a negative trigger to the existing overhang of the US Fed likely raising rates in March 2022. Russian Index fell over 50% from the recent peak.

An interesting point to note is that the US stocks rose this week (Nasdaq and S&P 500 up 1% each while Dow ended flat) despite Russia’s invasion of Ukraine or perhaps because of it. The risk of an attack hung over markets for weeks, so the actual start of war may have shifted investors’ focus to the chances of a resolution. The market is clearly betting that the Federal Reserve will slow its tightening in response, giving riskier assets a chance to rise more.

Gold price fell half per cent against the previous week (Touched over 1-year high of $1974) on a highly volatile trade. As result, the market recovered partially in the last couple of days because investors believe that the fallout from the Russia-Ukraine conflict is not going to have a big enough global effect to send the U.S. into a recession. Moreover, the market is expecting that the US Fed may avoid aggressively hike interest rates in the current situation. However, the anticipation is that volatility may continue not only in the domestic market but also globally.

The biggest near-term worry for Indian markets is the Russia-Ukraine crisis. The first worry is that of Russia, the second is the impact due to the upcoming U.S. Federal Reserve’s rate hike (March 16), the third worry is LIC IPO, which will pull out some money and the fourth major worry is state assembly elections (March 10). Rising oil price is also a concern for the Indian economy as a 10% rise in oil price may result in an impact of $15 billion additional burden and also lead to higher inflation.

Technically Nifty should hold above 16666 then we can see 17000 and can rally to 17350. If the lower side at 16400 is broken then we can see sell of till 16200. However, it looks like a temporary near term bottom has been made for the market and resistance is at 17400. Traders avoid aggressive buying interest till there is stability in global markets, oil price and any peace development between Russia-Ukraine.

VedantaTarget: Rs 385 | Stop loss: Rs 350

Metals stocks have been bouncing back quite sharply in this blood bath, we believe Vedanta has taken support at 338 and bounced back smartly to 362. long build-up in the future segments was also visible. Traders are advised to keep longs in Vedanta, the stock has given breakout, buy with a stop loss of 350 and target of 385.

DLFTarget: Rs 367 | Stop loss: Rs 338

The real-estate sector was hit badly last week, correcting around 8 percent indices wise . we believe lot of stocks in the sector have made bottom for the short term. we prefer to stay in large caps to play for bounce back. Friday we saw sharp up move in DLF and cross the near term hurdle and stock can rally further from here. Traders can buy with a stoploss of 338 and target of 367

(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)