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Nifty outlook, top stock picks by Angel Broking: Buy Motherson Sumi, HDFC

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sensex, bse


11,000 defended on weekly basis, further relief likely


In the midst of global uncertainty, our markets opened lower with a decent margin last Monday. However, Nifty managed to recover some lost ground on the same day to reclaim the 10,800 mark. On the subsequent day, the index followed similar kind of pattern and showed first signs of revival. Despite Wednesday’s weak session, it took off at the stroke of the penultimate hour on Thursday and we saw complete gush in the market to see some sharp short covering moves. This lead was extended on Friday to eventually conclude the week with a smart recovery of more than 300 points from the lowest point.


Fortunately, we managed to defend the 11,000-mark on a weekly closing basis and the recovery started after precisely retesting some key moving averages and Fibonacci ratios. Firstly, the index tested the 61.8 per cent retracement level of the previous up move. This point was coincided with the ’89-EMA’ on weekly chart as well as 161 per cent (Golden Ratio) of the recent small up move from 11,108.30 to 12,103.05. In addition, the ‘RSI-Smoothened’ oscillator on daily chart had reached the lowest level since October 15, 2018. All these key observations were hinting towards the possibility of some relief from the crucial junction of 10,800. Hence, we avoided shorting and in fact kept focusing on some probable short covering candidates. The strategy played out well and we are back above 11,100.


But the real question lies whether the worst is over or not? In our sense, it would be too early to comment on this and although, we have taken a pause at crucial technical cluster of supports, we need to wait for some further confirmation. As of now, one should construe this rally as a relief move and going ahead, 11,200 – 11,300 are the levels to watch out for. If we manage to surpass this wall, the next possible resistance is placed in the zone of 11,450 – 11,500. At this juncture, the pragmatic approach would be to take one step at a time and focus more on individual stocks. On the lower side, the immediate support is seen around 11,062 – 10,975 and with a broader view, as long as we are defending 10,782 – 10,750, there is no reason to worry for.


Stock Recommendations:


NSE Code – Motherson Sumi


View: Bullish


Last Close: Rs 107.35


Justification – Last one and half a year has been a challenging period for the auto and auto ancillary stocks. This stock has been experiencing relentless sell-off ever since it reversed after clocking record high of Rs 258.01 in December 2017. With extended correction at the midst of the week, the stock retested its 2016 lows of Rs 88.07 and had a sharp recovery to form a ‘Bullish Hammer’ on daily chart on Thursday. On the following day, we witnessed a sharp short recovering rally of nearly 10 per cent and thereby confirms its short term reversal. Considering the price and volume activity, we expect extension of this relief move in coming days. Hence, we recommend buying this counter for a target of Rs 120 and the stop loss should be fixed at Rs 99.


NSE Code – HDFC LTD


View: Bullish


Last Close: Rs 2,211.65


Justification – Since the Budget day, we witnessed a massive correction in some of the marquee names that have shown gravity defying moves over the past year and a half. In fact, these are the ones who propelled index beyond the 12,000-mark. ‘HDFC Ltd’ clearly has been one of the handful of stocks. The stock price retested its previous breakout points and has given a stellar recovery in the week gone by. Daily and the hourly chart looks encouraging and considering the overall price development, we will not be surprised to see this stock extending this relief move. Thus, traders can look to initiate longs for a target of Rs 2,285 and the stop loss should be fixed at Rs 2,175.

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Disclaimer: The views expressed are the analyst’s own. He may have positions in one or all of the above mentioned stocks.

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Market Updates

Sitharaman’s sops for NBFCs may perk up lending, ease liquidity stress

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Illustration by Binay Sinha


To further ease the liquidity stress in the non-banking sector and nudge them to revive their lending activities, Finance Minister (FM) Nirmala Sitharaman on Friday announced a slew of measures for non-banking financial companies (NBFCs) and housing finance companies (HFCs). The government hopes this will result in more credit support for purchase of houses, vehicles, and consumption goods.


The government has provided additional support of Rs 20,000 crore to the stressed housing finance companies from National Housing Bank (NHB). With this, the additional liquidity support for the HFCs from NHB has gone up to Rs 30,000 crore.



In the Union Budget last month, the FM had encouraged public sector banks (PSBs) to buy high-quality pooled assets of NBFCs up to Rs 1 trillion for which the government would provide a one-time six-month partial credit guarantee for the first loss of up to 10 per cent.


The Reserve Bank of India (RBI) had also chipped in by tweaking banks’ bond-holding norms. This will allow banks to borrow an additional Rs 1.34 trillion exclusively for buying such pooled assets and giving loans to NBFCs. The FM on Friday said this partial credit guarantee scheme will be monitored at the highest level in each bank. Through this, it is expected that many of the assets will get quickly pooled and NBFCs will receive the necessary liquidity. “NHB has already settled some of the issues. NBFCs are receiving money from the banks and are moving towards funding,” said Sitharaman.


Sanjaya Gupta, managing director, PNB Housing Finance, said “This will support growth and ease the liquidity crunch. HFCs will now get an additional Rs 20,000 crore from NHB. The initiatives have potential to kick start the real estate sector.”


The government has also permitted NBFCs to use Aadhaar-authenticated bank KYC to avoid repeating the same process when a customer approaches it for credit. This has been a long-standing demand. The necessary changes in the Aadhaar regulations and Prevention of Money Laundering Act rules will be made, the FM said.


“This will streamline the process and also reduce frauds,” said Raman Aggarwal, chairman, Finance Industry Development Council.


The government has also asked PSBs and NBFCs to fast-track their collaboration to provide credit to micro, small and medium enterprises, small traders, self-help groups, and micro finance industry client borrowers.

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Market Updates

PACL Case: Sebi panel invites expression of interest for 28,974 properties

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Sebi


A committee headed by Justice R M Lodha has invited expression of interest (EoI) from prospective buyers for a total of 28,974 properties belonging to PACL Group.


Market regulator Sebi had set up a committee headed by former Chief Justice of India R M Lodha following a Supreme Court order to refund money to investors in the matter of PACL Group.



As per the notice issued by Sebi, the committee has divided the total 28,974 properties belonging to PACL group in four zones — east, west, north and south — with maximum properties being located in the southern zone.


Regarding PACL properties, the apex court’s order dated July 30 observed “we also leave it open to the committee to receive any further offers and to explore them after duly publishing a further notice on the website,” the notice said.


In pursuance of apex court’s order, the committee “invites Expression of Interest from prospective buyers clearly indicating therein, list of properties in each zone, its circle rate, the offer amount and other relevant details,” the Friday notice said.


“The proposal should be for properties in each zone aggregating in value not less than Rs 1,000 crore,” the notice added.


The notice further said that the last date of receipt of proposals is September 9.


PACL, also known as Pearl Group, had raised Rs 60,000 crore from public in the name of agriculture and real estate businesses and was found by Sebi to have collected these funds through illegal collective investment schemes over 18 years.

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Improved market access for domestic retail investors with Aadhaar-based kYC

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Markets, Investors, Indices, Stocks


The government will allow Aadhaar-based KYC for domestic retail investors, and necessary amendments to the rules under the Prevention of Money Laundering Act will be issued.


Announcing a slew of measures to boost the economy, the government said the Depository Receipt Scheme 2014 is expected to be operationalised soon by Sebi. “This will give Indian companies increased access to foreign funds through American Depository Receipt (ADR)/ Global Depository Receipt (GDR),” she said.



In order to improve market access for the domestic retail investors, Aadhaar-based KYC will be permitted for opening of demat account and making investment in mutual funds. In this regard, necessary notification for amendments in PMLA rules would be issued.

Besides, steps would be taken with regard to offshore rupee market.


“To bring offshore rupee market to domestic stock exchanges and permit trading of USD-INR derivatives in GIFT IFSC, Ministry of Finance is working with RBI to introduce this measure shortly,” the government said.

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