Markets witnessed a major shake-out on Tuesday with high beta sectors like metals, small caps, and energy declining by more than 2% with the Nifty Metal Index taking a major hit of more than 5% while Bank Nifty ended with modest gains.
This phase of sectoral rotation would force funds to move out from the non-financial segment back to the financial sector forcing the Nifty to rally towards 19867 in the next 2 months.
The sudden surge in the spread of the Nifty 50 & Nifty 500 Index clearly indicates the next leg of the rally would be restricted to a few large caps while broader markets would see severe underperformance.
We expect Nifty to bottom out around 16123 and sustainable gains to be visible after India VIX settles below 18%.
Nifty 50 Index & Spread of Nifty50-Nifty500 Index
Stocks to watch
Positive Read through
- Gujarat Gas posts a strong set of Q4 numbers owing to price hikes and lower raw material costs. Volumes come in line with Street estimates
- MGL- margin 20 pct vs 10.1 pct, EBIDTA per scm at Rs 7.5 vs expected Rs 5.3
- Max Financial Gross premium up 13 pct, VNB margin at 31.9 pct
- RITES secures new order of USD 12.6 mn from the railway in Ghana
- Zensar Tech- Dollar revenue growth at 4.15 pct, order booking up 32 pct QoQ
Negative Read through
- USFDA Inspects Aurobindo Pharma’s unit 7 and issues 6 observations
- Cipla- margin at 14.3 pct vs estimates of 20.3 pct, FY23 guidance at 21-22 pct.
- Kansai Nerolac- Gross margin dips 660 bps YoY and 330 bps QoQ
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