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Taking Stock: Trade deal hopes, possible rate cut on Dec 5 lift sentiment; Nifty ends above 12K

The Nifty50 recouped losses and closed in the green after three sessions of decline. The index closed above its crucial support placed at 12,000 levels, and above its 5-Days EMA placed at 12,039.

Let’s look at the final tally on D-Street – the S&P BSE Sensex rose 178 points to 40,850 while Nifty50 closed 49 points higher at 12,043 on Wednesday.

Sectorally, the action was seen in metals, consumer durable, IT, and banking stocks while on sectors that remained under pressure include capital goods, energy, oil & gas, and consumer discretionary.

The broader market performed in-line with benchmark indices – the S&P BSE Midcap index rose 0.5 percent while the S&P BSE Smallcap index was up 0.30 percent,

Markets took a U-turn after media reports suggested that the United States and China are moving closer to agreeing on the number of tariffs to be rolled back in a phase-one trade deal, Bloomberg reported on Wednesday, citing sources.

The report flared a surprise rally in metals as well as some of the auto stocks. Tata Motors closed with gains of 7 percent, followed by metals stocks such as Tata Steel, and Hindalco which closed with gains of over 2 percent each.

Experts feel that India is a still buy on dips market and as long as it trades above 12,000 levels, investors should consider trading on the long side.

Among the big news which kept investors busy – on the macro front, India’s dominant services sector bounced back to growth in November, expanding at its fastest pace in four months. The Purchasing Managers’ Index rose to 52.7 last month from 49.2 in October.

To deepen the bond market in India and increase retail participation — the Cabinet Committee on Economic Affairs, has given its approval for creation and launch of Bharat Bond Exchange Traded Fund (ETF) to create an additional source of funding for Central Public Sector Undertakings (CPSUs) Central Public Sector Enterprises (CPSEs), Central Public Financial Institutions (CPFIs) and other Government organizations.

Bharat Bond ETF would be the first corporate Bond ETF in the country. It will also provide access to retail investors to invest in bonds with smaller amounts (as low as Rs. 1,000) thereby providing easy and low-cost access to bond markets.

The Rs 750-crore IPO of Ujjivan Small Finance Bank, the subsidiary of listed microfinance lender Ujjivan Financial Services, has subscribed 165.2 times on the final day of bidding December 4.

Investors will watch out for the outcome of the MPC committee on Thursday. Most experts see a 25 bps rate cut by the central bank.

“It was a roller coaster ride for the market participants as the benchmark indices oscillated volatile in a range but finally settled with the gain of over half a percent. Initially, weak global cues and cautious ahead of the RBI policy outcome were weighing on the sentiments but the news of possible breakthrough in the US-China trade deal completely changed the tone in the latter half,” Ajit Mishra, VP – Research, Religare Broking Ltd told Moneycontrol.

“Markets are largely mirroring the world indices in absence of any major local trigger. And now all eyes are on the RBI and we feel that markets have already discounted the 25 bps point cut and the commentary on future trajectory would be more critical,” he said.

Top Nifty gainers: ICICI Bank, Yes Bank, and Tata Motors

Top Nifty losers: Coal India, RIL, and L&T

Stocks & Sectors:

Sectorally, the S&P BSE Metal index rose 1.6 percent, followed by the S&P BSE Bankex which rose 1.4 percent, and the S&P BSE IT index closed with gains of 1.37 percent.

On the losing front, the S&P BSE Capital Goods index fell 1.3 percent, followed by the S&P BSE Energy index which fell 1.1 percent, and the S&P BSE Oil & Gas index closed with losses of 0.26 percent.

Volume Spike of 100-200% was seen in stocks like Coal India, RIL, Apollo Hospitals, Tata Motors, Divi’s Laboratories, and MindTree.

Long Buildup – Equitas, MindTree, NMDC, and Dish Tv

Short Buildup – L&T, Escorts, HPCL, and Godrej Consumer Products

Stocks in news:

HDFC Asset Management share price fell 3 percent on December 4 after foreign promoter Standard Life Investments started selling some stake in the company through offer for sale.

Crompton Greaves Consumer share price rose 3 percent on December 4 after SBI Mutual Fund has bought little over 3 crore share of the company in the bulk deal.

Tata Motors share price gained 7 percent on December 4 after double-digit growth in Land Rover lifted overall sales in the United States.

CSB Bank, formerly known as Catholic Syrian Bank, made a strong debut on markets on December 4, with the share price rallying by about 54 percent over the issue price of Rs 195 on the listing day.

Technical View:

The Nifty50 closed above its crucial resistance at 12000, and above its 5-Days EMA, but it failed to surpass Tuesday’s intraday high of 12068

Nifty50 appears to have registered a bullish reversal formation called Piercing pattern

Nifty likely to trade with a positive bias in the short term for the next couple of trading sessions as long as it trades above 11,935

Traders should remain neutral on short side and can look to buy dip between 12k – 11970 levels, with a stop below 11935 and look for a target of 12100 levels, suggest experts.

Three levels to watch on Thursday – 11,936, 12068, 12158

Max Call OI: 12500, 12000

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Source: moneycontrol