Buy Bharti Airtel, Canara Bank stocks this week; Nifty may head to 17777 if its holds 17350

Volatility has fallen from its recent high same as the India VIX to 16.06 from 19 levels comparatively VIX needs to cool down to further for complete grip of bulls in the market.
(Image: REUTERS)

By Rahul Shah

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Bulls are attempting to take the charge once again. Nifty gained week over week and showed signs of recovery in the market. During the week big event RBI policy in which accommodative stand by policymakers gave the booster to the financials and came back to flavour. After a deep sell-off in November in financial stocks, we saw a good pullback.

Macroeconomic trends continue to remain strong. Real GDP grew 8.5% YoY for the September quarter driven by both investment and consumption. GST collections grew 25% YoY for Nov’21 and remained above Rs 1.3 lakh crore for the second consecutive month. However, India’s IIP remained tepid at 3.2% in the peak festive months of October, weighed down by the base effect and weak prediction of consumer durables and capital goods due to which there could be more measures by the government to support the revival. While the new variant ‘Omicron’ adds to the uncertainty, we expect more clarity to emerge in the next few weeks – until which markets are likely to remain volatile. This will mar sentiment in Travel, Tourism, Hospitality, and Retail, which has seen significant outperformance in the last few months. Even sectors/stocks exposed to markets with rising COVID-19 cases/greater prevalence of the Omicron variant may underperform. We expect sector rotation in the market to continue, IT/TELECOM, and Financial to make a comeback. Equity valuation, post-correction, at ~20x FY23E Nifty P/E is relatively more reasonable.

Technically Nifty has to continue to hold above 17350 for an up move towards 17650 and 17777 zones whereas as on the downside, support has shifted higher to 17250 and 17100 zones. Volatility has fallen from its recent high same as the India VIX to 16.06 from 19 levels comparatively VIX needs to cool down to further for complete grip of bulls in the market. For the coming week we believe Financials which were in the lime light should continue to roar in coming week, lot of large financial has corrected ‘

Pick of the week:

Canara Bank: Buy
Target: Rs 237 | SL: Rs 213 

PSU banks witnessed a sharp rally in the second half of Friday’s trade, PSU bank index trading above most DMA’s taking support around the previous high of 2580 and bouncing back smartly. This indicates PSU banks will outperform, amongst them we like Canara bank which has given a consolidation break out after touching a low of 198 and consolidation of 2 weeks and has fallen from touching a near term high of 247 RSI Oscillators is moving northward on the weekly scale and thus showing further strength in the counter. Considering the current chart structure, we advise traders to buy stock for an upside move towards 237 with a stoploss of 213

Bharti Airtel: Buy
Target: Rs 750 | SL: Rs 693 

We have seen renewed interest in telecom space in last two months, Among all the sectors its has been the best performing sector. Bharti airtel after touching the high of 781 in November has corrected, it is trading in the higher range of the stock , strong momentum on the weekly and monthly charts RSI oscillators is positively placed which will support the move towards the higher levels. Looking at the overall chart structure, we are expecting the stock to inch higher to 750 zones, hence we advise traders to buy stock with a stoploss of 693.

(Rahul Shah is a Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. Views expressed are the author’s own please consult your financial advisor before investing.)