The Sensex ended a 3-week rally, in which the benchmark index lost 1.3 per cent in a truncated week. The Nifty lost slightly more and ended down 1.5 per cent. Interestingly, the Sensex closed below the 35,000 points mark at 34,981 points. It was also a truncated week for the markets, as exchanges were closed on Friday for a festival holiday.
Indiabulls Housing, Tata Steel lose groud
IndiaBulls Housing and Tata Steel were among the top losers from the Nifty this week. Metal stocks in fact had a tough week with stocks like Coal India and NMDC dropping to fresh 52-week lows, as sentiments for metal stocks were not too great.
Solid recovery in the rupee, which was the best performing Asian currency, helped little to improve sentiments. Unwinding was seen ahead of the state election results due on Dec 11. In fact, exit polls are likely on Dec 7 evening, which should increase the excitement for investors.
One thing is certain that there is going to be increased volatility ahead of the outcome on Dec 11. If you are unsure which way the outcome would be, it is best to stay invested a little and sit on cash as well. So, just in case the outcome is not favorable to the BJP, we might see a sudden collapse in the markets.
This may leave investors with an opportunity to buy at the lower levels, if they sit on cash.
Stocks to watch next week: Adani Ports, Wipro, HPCL Tech and Bajaj Finance
Asia Index is making some changes to its indices which will be effective from 24 December 2018. On Thursday it said that it will be dropping IT major Wipro Ltd and Adani Ports & SEZ Ltd from BSE Sensex. These will be replaced by HCL Technologies and Bajaj Finance.
All of these stocks are expected to see volatility, at least in the initial part of trade. IT stocks were among the worst performing this week, after a sharp gains in the rupee. It would be interesting to watch their movement next week.
Bet on defensives
Election outcomes are very difficult to predict. Hence, it would be a good idea to play into defensive stocks. Some stocks like Coal India offer excellent opportunities as defensive plays and dividend yields. In fact, the stock is offering a dividend yield as high as 7.5 per cent, assuming that the company declares a Rs 20 per share dividend, which it should.
One can also look for defensive plays like MNC FMCG companies like HUL.
This article is strictly for informational purposes only. It is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author of this article do not accept culpability for losses and/or damages arising based on information in this article.