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The global financial landscape is currently experiencing a period of uncertainty and volatility, largely due to the US Federal Reserve's (Fed) decision to cut interest rates. While a rate cut is widely anticipated, the extent of the reduction remains unclear, creating unease and fluctuations in markets. This analysis, provided by Aamar Deo Singh, Senior Vice President-Equity, Commodity & Currency at Angel One, offers insights into the current market dynamics and provides recommendations for specific stocks, including Vodafone Idea, Oil India, Housing & Urban Development Corporation (HUDCO), and others.
Despite the prevailing uncertainty, the Nifty index continues to outperform the Bank Nifty, driven by robust performance in the IT, Pharma, and FMCG sectors. However, the overall market is expected to trade sideways in the near term, with a crucial support level for Nifty around 24400-24500 and resistance seen around 25,200-25,300. For Bank Nifty, the key support level is estimated at 49,600-49,800, while resistance is anticipated around 51,400-51,600. The banking sector faces challenges in maintaining Net Interest Margins (NIMs) due to misalignment between credit growth and deposit growth, impacting overall profitability.
The sharp decline in crude oil prices has positively impacted the OMC (Oil Marketing Companies), paints, and tyre sectors as their cost burden reduces, improving their bottom line. However, this effect is expected to be short-lived as many stocks in these sectors are witnessing profit booking. A sustained decline in crude oil prices could lead to significant value addition for these companies, but the likelihood of OPEC announcing a cutback in production to support prices remains high. Foreign Portfolio Investors (FPIs) have invested a significant amount in Indian markets in September, indicating renewed interest, particularly in large-cap stocks. The potential rate cut in the US and strong macro-fundamentals in India continue to attract FPIs to the Indian market. However, valuations in certain sectors are not considered cheap, which might hinder FPIs from making large investments, leading them to adopt a selective approach.
Investors are advised to consider booking profits in Piramal Pharma, Godrej Industries, and Godfrey Phillips, at least 50%, unless they hold a long-term investment perspective of 4-5 years. The market is expected to remain volatile in the short term, influenced by the upcoming US Fed meeting and the US Presidential elections, which are significant events capable of impacting both domestic and global markets. On the downside, investors need to exercise caution with Vodafone Idea, considering exit opportunities. OIL India and HUDCO can be held, with support levels around 590/600 for OIL India and 220/230 for HUDCO. Exit opportunities should be explored on any bounce back, as short-term tops have formed for both stocks. It's important to note that these are expert recommendations and do not necessarily represent the views of Economic Times.
Source: What to do with Vodafone Idea, HUDCO, Oil India and 3 other stocks? Aamar Deo of Angel One decodes