BJP win helps Sensex Cross 40,000 mark: Analysis by Epic Research
A massive mandate to the incumbent party as BJP created another historical benchmark by nearing the 300+ mark while NDA clinching the 345+ mark. This is much much more than anticipated and what was expected.
For markets, this means the smooth functioning of the existing policies, framework, economic activities and so much. This is a big thumbs up which means that all the work that has been in place for last few years would continue to function. Be it economical, Fiscal or structural. Projects like Bharatmala, PM-JAY, Ujjwala, PM Mudra Loan, Relaxation to Middle class in Taxes, Railways reforms, Swachh Bharat, Jan Dhan, PMJJBY etc. And, these are some big aspirations for the Modi and may expand further in Modi 2.0. So if one has to keep the focus on where to move from here in terms of investments. There are many sectors that are performing well in the last few years with Financials, Pvt banks, banking Sector as a whole, Auto, Energy. The small Cap, Midcap has also shone in the last few years though lately crisis of liquidity crunch is haunting them.
We believe PM JAY, Bharat mala and the financial sector may continue to lead and further post good returns in the coming year. As these are game changers and massive and brings in a lot of investments that are in worth trillions. The benefits are to be seen in the coming years.
Infrastructure, Construction and Financials along with select Midcap and Smallcap are the areas one should focus for. But, at the same time, we believe investors should wait for some kind of profit booking or valuations being expensive. le there be any correction that is beyond 5- 10% and we may be seeing fresh money coming into the market.
Now, on the other hand, the Market has seen a new all-time high of 12041 but ended the day on the back of profit booking. This is what we have been indicating in the last few days. The volatility was very much expanded, derivatives were pointing to a range of 12100 - 11500. Equity markets have discounted the Modi verdict in last few months. Though the tub-thumbing victory may need to be digested by markets. The profit booking and the loss market posted today is the end result of heightened volatility; which compressed from 29 to 19 today. Derivatives data pointed to a range bound action and that is what we have seen with Nifty not able to surpass 12100 while it may continue to take support around 11500. We have seen both calls and puts being hammered today amid declining volatility.
Coming days, we believe there may be some sideways movement between 11450 - 11800. Though one should still utilize the dips for a potential short term upside to 11900. But its time to be aware that there is a selling pressure around 12000 and it is the third time we have not been able to hold above 11900.
BFINVEST - Stock outperformed well with volume breakout on the daily chart and gave closing above the 200 EMA on the daily chart. We recommend buying above 264 for the target of 267 with the stop loss of 261.
CENTURYTEX - Stock was quite negative and closed in red with average volumes. It has strong support of the trendline on the daily chart. The RSI is also showing upside moves in upcoming sessions. We recommend buying above 997 for the target of 1005 with the stop loss of 990.
UNIONBANK - Stock is trading at the support level on the daily chart of the trendline. The RSI is also at the oversold level. It also formed a Doji on the hourly chart. We recommend buying above 70.50 for the target of 71.50 with the stop loss of 69.