Trade Setup: Top 15 things to know before market opens on February 10, 2022

Indian equity indices surged for the second day in a row on Wednesday, finishing with gains of more than a per cent each, as investors anticipated the conclusion of the RBI’s policy review, which was due the following day. Gains in almost every sector propelled the main indexes higher, with auto, consumer durables, metal, and banking stocks leading the way.

The Nifty50 has formed a green candle after a dragonfly Doji pattern on the daily chart, suggesting a short-term bullish reversal, according to Rupak De, a Senior Technical Analyst at LKP Securities.

“Immediate resistance is visible at 17,530, a decisive move above which may induce a rally towards the recent peak of 17,775-17,800. Support is placed at 17,315,” he said.

Indian Indices

Sensex rose 657.39 points or 1.14% to 58,465.97 and the Nifty was up by 197.05 points or 1.14% to 17,463.80 in the previous session. Sensex touched high and low of 58,507.61 and 58,105.18, respectively. There were 27 stocks advancing against 3 stocks declining on the index. Nifty traded in a range of 17,477.15 and 17,339.00 and there were 42 stocks advancing against 8 stocks declining on the index.  

Broader Indices

The broader indices ended in green with the BSE Midcap index rising 1.23%, while the Small cap index was up by 0.57%. The top gaining sectoral indices on the BSE were Auto up by 2.18%, Consumer Durables up by 1.81%, Metal up by 1.58%, Bankex up by 1.32% and Consumer Discretionary up by 1.30%, while Oil & Gas down by 0.37% was the lone losing index on BSE.

Support and Resistance levels

Key support levels for the Nifty are placed at 17,376.13, followed by 17,288.47. If the index moves up, the key resistance levels to watch out for are 17,514.33 and 17,564.87, according to pivot charts.

SGX Nifty

The trends on SGX Nifty indicate a negative opening for the index in India with a 26-points loss. The Nifty futures were trading at 17,528.80 on the Singaporean Exchange around 07:20 hours IST.

Asian Markets

Asian markets finished broadly higher yesterday with shares in Hong Kong leading the region. The Hang Seng was up 2.06% while Japan’s Nikkei 225 was up 1.08% and China’s Shanghai Composite was up 0.79%.

US Markets

The S&P 500 rose 65.64 points, or 1.5%, to 4,587.18.

The Dow Jones Industrial Average rose 305.28 points, or 0.9%, to 35,768.06.

The Nasdaq rose 295.92 points, or 2.1%, to 14,490.37.

The Russell 2000 index of smaller companies rose 38.13 points, or 1.9%, to 2,083.50.

European Markets

European markets closed sharply higher yesterday with shares in Germany leading the region. The DAX was up 1.57% while France’s CAC 40 was up 1.46% and London’s FTSE 100 was up 1.01%.

SEBI asks AMCs to establish audit committees starting in August of this year

Sebi on Wednesday asked asset management companies (AMCs) to form audit committees that will be responsible for oversight of the financial reporting process, audit process and compliance with laws and regulations, among others. The circular will come into force with effect from August 1, 2022. Currently, an audit committee exists at the level of trustees of mutual funds. Sebi said the decision has been taken after taking into account the recommendation of the Mutual Fund Advisory Committee and the feedback received from the industry and has come out with a detailed outline for role, responsibility, membership and other features of the Audit Committee of AMC. The mandate of the committee is to review the financial reporting processes, the system of internal controls and the audit processes for the mutual fund operations of the AMC. Besides, it would be required to ensure that the rectifications, if any, suggested by internal and external auditors, among others, are acted upon.

For the first time, the mutual fund sector surpasses the five-million-SIPs threshold

The systematic investment plans (SIPs) in the mutual fund (MF) industry crossed the five crore mark in January even as market volatility pulled back the investor flows received by equity schemes. The MF industry added as much as 14 lakh new SIPs in January, showing AMFI data. Even though this was lower than the average 24 lakh SIPs added by industry in the past five months, industry executives say the long-term trends indicate that investors now understand the importance of SIPs. “We have seen investors now being more mature and willing to continue their SIPs despite market ups and downs. Investors who have come in over last 4-5 years have seen the benefits of staying invested in equities and see-through market volatility,” says Neil Parikh, chief executive officer of PPFAS MF.

FMCG companies indicate more product price increases 

Fast-moving consumer goods (FMCG) companies have indicated that another round of product price increases is imminent as they expect the rise in the cost of commodities and raw materials to persist for at least another quarter. “The inflation impact is not mitigating. We are seeing continuous inflation despite a base of 4-5 % inflation in the last year. On top of that, we are again seeing a 4-5 % inflation,” Mohit Malhotra, CEO of Dabur India, said on a post-earnings investor call. “The company may have to take more price increases going forward.” Britannia MD Varun Berry said that on account of unprecedented inflation across commodities, the company will increase prices by 10 % in the fourth quarter ending March. “The material inflation was 4 % in the first quarter, 14 % in the second quarter, and in the third quarter, it was 20 %,” Berry said in response to a query on a call with investors after reporting Q3 results. “We took a 1 % price increase in Q1, a 4 % price hike in Q2 and in Q3 we took an 8 % price increase. And we plan to take a 10 % price increase in Q4.” Sanjiv Mehta, CMD of Hindustan Unilever, India’s largest FMCG company, had indicated in January that calibrated price increases would be taken in the quarters ahead. According to Mehta, inflation is expected to moderate only in the second half of the calendar year 2022. “We are seeing unprecedented inflation; something we have not seen for at least the last 30 years,” Mehta had said. “And this is not demand-led but supply-led because of disruptions across the world. I believe that hopefully in the second half of the year, we should see some moderation in inflation.”

In January, equity mutual funds saw a net inflow of Rs 14,888 crore

Equity mutual funds attracted a net sum of Rs 14,888 crore in January, making it the 11th consecutive monthly net inflow. However, this was much lower than the net inflow of Rs 25,077 crore witnessed in December, data from the Association of Mutual Funds in India (Amfi) showed on Wednesday. Equity schemes have been witnessing net inflow since March 2021 and the segment has received a net inflow of over Rs 1 lakh crore during this period highlighting the positive sentiments among investors. Prior to this, such schemes had consistently witnessed outflows for eight months from July 2020 to February 2021 losing Rs 46,791 crore. Overall, the mutual fund industry registered a net inflow of Rs 35,252 crore during the period under review compared to a net outflow of Rs 4,350 crore in December.

Larsen & Toubro’s construction arm receives a “major” order in Bangladesh

Larsen & Toubro (L&T) on Wednesday said that its construction arm has bagged a ’significant’ order to construct hi-tech IT parks at eight locations across Bangladesh. This project is being funded by the Indian EXIM Bank and is the first IT and office space order that L&T has secured in Bangladesh. “The construction arm of Larsen & Toubro has secured an order from the Bangladesh Hi-Tech Park Authority to construct Hi-Tech IT Parks at 8 locations (2 packages at 4 locations each) across Bangladesh,” the company said in a statement. The company did not provide the value of the contract but said the order falls under the significant category, which ranges between Rs 1,000 crore and Rs 2,500 crore, according to the classification of contracts.

Bulk Deal data

VISHAL SINGH bought 46,800 equity shares in Debock Industries Limited at Rs 583.27 per share on the NSE, the bulk deals data showed.

MIKER FINANCIAL CONSULTANTS PVT LTD sold 81,000 shares of AAA Technologies Limited Rs 71.00 per share on NSE.

DELTA CORP LIMITED sold 2,83,024 shares in Advani Hotels & Resorts at Rs 90.39 per share on the NSE.

GAURAV CHORDIA bought 1,64,500 shares of Silgo Retail Limited at Rs 33.00 per share on NSE.

RAJEEV GOEL sold 1,00,000 shares in AKG Exim Limited at Rs 42.05 per share on the NSE.

RAMESH KOTI sold 1,00,000 shares in Ajooni Biotech Limited at Rs 82.13 per share on the NSE.

DII and FII data

Foreign institutional investors (FIIs) sold shares worth a net Rs 892.64 crore, while domestic institutional investors (DIIs) bought shares worth a net Rs 1,793.35 crore in the Indian equity market on February 9, as per provisional data available on the NSE.

NSE F&O Ban

BHEL and Punjab National Bank are under the F&O ban for February 10. Securities in the ban period under the F&O segment include companies in which the security has crossed 95% of the market-wide position limit.