More upside in RIL, HDFC Life; Ultratech may see more weakness: Santosh Meena

Benchmark equity indices ended the week on a positive note, thanks to buying during the early half of the week. However, the gains were cut short by reversal on Friday as traders dumped financial stocks ahead of the RBI meeting.

It was the third consecutive week of gain for the Indian equity market, led by the recovery in global markets, eased down US bond yields and mild drops in the dollar index. On the other hand, regular profit booking limits the gains.

Santosh Meena, Head of Research,

, said value buying in some beaten-down heavyweights by domestic investors and short covering also helped the market to move higher.

For the week ended June 3, Nifty50 index rose about 1.5 per cent, whereas sectoral indices such as realty and IT gained between 4-5 per cent. Pharma and Nifty Bank dropped 1-2 per cent each.

Talking about IT stocks, Meena said there was short covering and value buying from lower levels but added that there is still a risk of selling pressure at higher levels due to uncertain global cues.

“The long-term outlook for the Indian IT sector is still bullish. Therefore, investors should accumulate some of the quality names with decent valuations,” he added. “The leadership has moved from IT to the domestic economy facing sectors.”

Analysts said the real estate sector is coming out of multi-year pain and showing strong signs of growth. One should not look at the sector from a short-term perspective but it can be a good wealth creator in the next few years, he adds.

Nifty50 heavyweight

was among the top buzzed stocks for the week. The scrip zoomed 8 per cent in the last 5 trading sessions, pushing the index higher. The mcap of the company scaled Rs 19 lakh crore on Friday.

“Overall, the chart structure is bullish for Reliance,” said Meena. “If it manages to take out the Rs 2,850 level, we can expect a move towards the Rs 3,000 level.”

“Rs 2,800-2,850 is a supply zone where profit booking is expected. On the other hand, Rs 2,650-2,600 will be a strong demand zone at any correction,” he adds.

Decoding the technicals for

and , the analyst has a mixed view on the two bluechips counters.

The chart structure of Ultratech cement is looking bearish as there is a breakdown of head and shoulder formation which is leading risk for a move towards Rs 5,000 level, where Rs 5,300 is an intermediate support level, he said.

“Bajaj Finserv has strong support at the Rs 12,000 level and if it manages to hold this level then we can expect a buying towards Rs 14,000-15,000 level while Rs 11,500-11,000 are the next support level.”

The Indian equity markets are keenly awaiting the outcome of RBI’s next policy meeting scheduled between June 6-8.

According to the market expert, Nifty is facing resistance around the 16,800 level after a smart pullback rally of more than 1,000 points.

“16,400-16,350 is a critical demand zone that bulls need to protect to maintain the strength in the market. Otherwise, the overall downtrend may get momentum where 16,000-15,700 will be the next support area,” he added. “On the upside, 16,800-17,000 will remain a key supply zone.”

Ahead of RBI’s much awaited monetary policy meet, investors would be closely tracking financial stocks. Meena is bullish on the sector. He also advised to book profits in commodity stocks as global governments are looking to tame inflation.

Banking stocks outperform at the early stage of the rate hike cycle due to improved margins whereas the overall outlook of the banking sector is bullish as the worst of the NPA cycle is behind and there is strong loan growth momentum, he adds.

“We are bullish on corporate facing banks while investors have to be selective in NBFC stocks,” he suggested. “Investors should avoid stocks with high debt on books, unrealistic valuations, and corporate governance issues.”

Swastika’s research head is positive on insurance stocks, which are showing strength. “There is a breakout of the bullish cup and handle pattern in the stock of

where it may see the level of Rs 630 which is around its 200-DMA; above this, Rs 655 is the next target level.”

(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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