NIFTY WEEKLY PREDICTION & NIFTY TIPS FOR 1 FEB TO 5 FEB 2021

WEEKLY RESISTANCE FOR NIFTY: 14000, 14500,15000

PIVOT POINT: 13500

WEEKLY SUPPORT FOR NIFTY:  13000, 12500, 12000

WEEKLY CHART FOR NIFTY

DAILY RESISTANCE FOR NIFTY: 13800, 13900, 14000

PIVOT POINT: 13600

DAILY SUPPORT FOR NIFTY:  13500, 13400, 13200

DAILY CHART FOR NIFTY

Last Friday’s weakness was carried over to Monday as well and hence, Nifty witnessed a decent corrective move on the opening day to test sub-14300 levels. However, the bulls were not ready to give up easily as they came back strong on the subsequent two sessions on the back of overall global optimism. In the process, almost all major sectoral indices registered their new record highs. Everything looked hunky dory until the sudden profit booking took place in the last hour of the weekly expiry. This sell off went on to intensify on the last day of the week to erase all weekly gains to conclude tad below the 14400 mark. Monday morning, the global set up was just ideal to have a good head start for the final week of the January month. However, within few minutes of trade, market skidded sharply to not only pare down all gains but also entered a negative territory. For the remaining few hours, Nifty gyrated in a range with higher volatility and eventually managed to extend losses in last couple of hours to close tad below the 14250 mark. Our  markets  were  closed  on  Tuesday  on  account  of the Republic  Day; but the  global  peers  had  couple of weak  sessions,  which  we had  to  digest  at  the  opening  Wednesday. Surprisingly, market opened on a flat note, taking cues from the positive Dow futures yesterday  morning.  However,  this  turned  out to  be  a  formality  as the  selling  resumed  right  from  the  word  go  to  slide  back  to  the negative territory. As the day progressed, indices kept on breaching all intraday supports one after another.  Eventually, the Nifty concluded with  almost  couple of  percent  losses to  mark close below 14000 for the first time in the new year.  We had a weak session on to snap all monthly gains and eventually closed below 14000 for the first time in the New Year. Since last 3 4 sessions, our markets looked nervous but it wasn’t due to the global markets. Previous night for the first time, US and European markets had a meaningful. The Economic Survey 2021, released on January 29 ahead of Budget 2021, has called for adequate capitalization of public sector banks. If capital is not provided, lenders may resort to risk-shifting, it said. In turn, impacting the real economic recovery. The markets were successful in breaking 13,700 and has closed below it too. Investors lightened their portfolios and decided to sit on cash on Friday as they await Finance Minister Nirmala Sitharaman's third Union Budget presentation due on Monday, February 1. In a sea-saw trade today, stock specific moves swayed markets even as overall mood remained subdued.  As Nifty-50 has rallied more than 90% from the Mar’20 lows, a 10-12% correction, if it comes, could be healthy for the market. Nifty-50 is trading at 23x on one-year Fw PE which factors in most part of the healthy earnings growth likely to come in FY22E. Valuations are stretched by any standard and investors need to be cautious. It is better to avoid riskier bets at this juncture and book profit part profit in Nifty-50 goes closer to 15,000 mark. Risk-averse investors can also look to protect their portfolios by buying PUTs of either Feb/March if Nifty-50 goes near 15,000.

NIFTY: A STRONG SUPPORT WILL BE @ 14000; STRONG RESISTANCE LEVEL SEEN @14800

We witnessed nervousness around the 14750 levels and the Nifty erased all its gains to close in the red. However, the trend continues to remain positive and we still have a pending target of 14800-14,900. Since the support of 14300 continues to hold, a favorable risk to reward trade can be initiated with a target of 14800 and a stop of closing below 14300.

TECHNICALLY SPEAKING.

As we near the budget 2021, the implied vols will remain high which means higher volatility in the market. The NSE Volatility Index has risen from 18% in Mid December to 23% as of now. We expect Nifty  to range between 14,000 and 15,000 till budget and any break-out or break-down from this range could be seen post budget. On the higher side, Nifty can go up another 5-7% at best on the back of a very good budget and an upward revision in earnings led by Q3 results. In case budget disappoints then Nifty-50 can break 14,000 and go to 13,000 which is a major break-out support area. We are not expecting any major crash in the market at this moment as the earnings print is coming strong which could provide a cushion on the downside. This year the normal euphoria of the budget is missing thanks to the already sharp run-up in the market and series of reforms and announcements that have already come from the government in the last six months. The Union budget will seek to promote the two key growth engines, viz. social and physical infrastructure while being mindful of the limited fiscal space. We expect the budget to focus on AtmaNirbhar Bharat Vision, health, physical infrastructure, and financial sector along with rural India. We do not expect any major changes in taxes. However, we do not rule out measures/incentives related to housing and health. There are reports about a Covid cess though it is unlikely to yield much unless rolled out to most of the taxpayers (individuals & corporates). On the indirect tax front, the government may increase customs duties on finished/semi-finished products in the PLI related sectors. For budget numbers we assume Nominal GDP growth to be 13.8% in FY22. On the revenue front in FY22, we estimate gross tax revenue growth at 20%, non-tax revenues at Rs2.6 lakh cr and divestments at Rs 1.5 lakh crore. We expect budget corporate taxes to grow 25%, personal income tax to go up by 15% and indirect taxes to go up by 20% in FY22. On the expense front in FY22, we assume overall expenditure growth at 7% (revenue expenditure growth at 6% and capital expenditure growth at 12%). On Fiscal Deficit we expect the government to end FY21E with a Gross Fiscal Deficit/GDP (GFD/GDP) of 7.1% with consolidated GFD/GDP at 11.9%. For FY22 we model GFD/GDP to come down to 5.5% mainly on the back of strong nominal GDP growth. We expect FY22 gross market borrowing to be marginally lower at around Rs.10.7 lakh cr against Rs.12 lakh cr in FY21. Our expectation is that rates should harden across the curve in FY22 and on this basis we expect the 10-year bond yield to move towards 6.25- 6.75% in FY22.