Street signs: Nifty faces resistance, auto stocks see long build-up & more

Nifty faces resistance at 17,300

The Nifty50, which has bounced over 12 per cent from this year’s lows, faces resistance at 17,300. The index last closed at 17,158, a near three-month high. According to executives at domestic brokerages, several high net-worth investors (HNIs) have covered their aggressive long bets in the index and have built short positions, judging recent gains as excessive. “For traders now, the 200-day simple moving average or 17,000 would act as a key support zone and on the higher side, 17,300-17,400 could act as a profit-booking zone for short-term traders. Buying on dips and selling on rallies could be the ideal strategy for short-term traders,” said Amol Athawale, deputy vice-president, technical research, Kotak Securities.

Auto stocks see long build-up

Open interest and long build-up in automobile stocks, particularly Maruti Suzuki (MSIL) and TVS Motor, have seen a sharp spurt. The bullishness stems from a positive long-term outlook for automakers. Jefferies expects earnings for both MSIL and TVS to more than double between FY22 and FY24. “MSIL is entering a strong growth phase with favourable demand, product and margin cycles,” it said. On TVS, it said rich valuations are justified “given strong growth outlook and headroom for further margin expansion and improving franchise”.

Broking stocks back on the radar

Shares of broking companies have underperformed the market this year amid concerns of revenue contraction and margin pressure because of falling cash market volumes. However, the latest rebound in the market may provide a much-needed shot in the arm. Over the past month, shares of leading brokerages ICICI Securities and Angel One have posted double-digit gains despite earnings disappointment. Industry players say if the worst of the market sell-off is over, investment in broking stocks can emerge as a good theme as valuations have turned attractive.

Contributed by Sundar Sethuraman