Budget 2022

Movers and Shakers: Sensex, Nifty end the volatile Budget Day in green

Akhil Nallamuthu |Gurumurthy K |BL Research Bureau | Updated on: Feb 01, 2022

FILE PHOTO: India's Finance Minister Nirmala Sitharaman as she leaves her office to present the federal budget in the parliament in New Delhi, India, February 1, 2022. REUTERS/Anushree Fadnavis/File Photo | Photo Credit: ANUSHREE FADNAVIS

Infra push drives metals and capital goods stocks

As always, this Budget Day has also been volatile for the Indian stock markets. Sensex saw more than a thousand-point swing while the Nifty 50 saw 378 points range for the day. Both the indices fell sharply after the Budget speech was over.

Sensex fell to a low of 57,737.66 and Nifty made a low of 17,244.55. However, the fall was short-lived. Both the indices recouped all the loss to close the day in green. Sensex was up 1.46 per cent and has closed at 58,862.57. Nifty closing the day at 17,576.85 was up 1.37 per cent.

Outlook

Both Sensex and Nifty have strong resistances coming up. Sensex has resistance at 59,000. A strong break above it can take the index up to 60,000-61,000 this week. But a pull-back from 59,000 and a fall below 58,300 will be negative to see 57,000 and lower levels on the downside.

Nifty on the other hand has resistance in the 17,650-17,750 region. A strong break above 17,750 can take the index up to 18,000-18,200 this week. Inability to breach 17,750 and a decisive fall below 17,400 will be bearish to revisit 17,000 levels.

Winners

The BSE Metal and BSE Capital Goods indices rising by 4.92 and 2.93 per cent respectively were the top performing indices. The ₹20,000 crore Budget allocation for infrastructure projects and increase in the capital expenditure for FY23 to ₹7.5 lakh crore from ₹5.54 lakh crore in FY22 pushed these sector indices up.

Within the BSE Metals and Capital Goods indices Tata Steel (up 7.57 per cent) and Graphite India (8.79 per cent) were the top performers respectively. Will the Budget push continue in these stocks in the coming days? Here is what the charts say for these two stocks.

Tata Steel (₹1,167.65)

The stock has been getting support at ₹1,060 since November. But there is an important resistance at ₹1,255. If it manages to breach ₹1,255 decisively, a fresh rise to ₹1,450-₹1,500 is possible. But inability to breach ₹1,255 and a break below ₹1,060 will bring the stock under pressure for a deeper fall to ₹900 and even lower levels in the coming weeks.

Graphite India (₹529.65)

The near-term outlook is positive for the stock with support at ₹455. A rise to ₹600-₹620 looks possible if the stock moves further up from here. However, the stock will have to rise past ₹620 decisively in order to become completely bullish from a long-term perspective. A pull-back from the ₹600-₹620 region may have the potential to drag the stock down to ₹400 levels again. The price action in the ₹600-₹620 region will need a close watch.

Losers

The BSE Auto and BSE Oil & Gas indices lost the most on Tuesday. As common factors, there was no relief with respect to cess on fuel prices which the industries have been calling for. Also, inclusion of oil products under GST remains unaddressed.

The expected tax incentives that could boost investments in the oil sector did not find any mention resulting in a disappointment. For autos, there were no measures to curb the rising input costs. Tata Motors (down 2.6 per cent) and HPCL (down 7.2 per cent) fell the most within these indices.

HPCL (₹291.55)

The stock moved in line with the bearish bias which it has been exhibiting since November last year. However, a strong support is around ₹287 where a rising trend line support and the 20-day moving average coincide. Therefore, bulls still stand a chance to perform a recovery.

A rebound from this support and a rally past the prior high of ₹332 can bring back the upward momentum. In that case, the stock can retest the key resistance at ₹350.

On the other hand, if the stock slips below ₹287, there is a possibility of a quick decline to ₹250 – a considerable support. Subsequent support can be spotted at ₹215.

Tata Motors (₹504.3)

Though the stock fell on Tuesday, the price action shows that it has largely been oscillating between ₹450 and ₹530 since October 2021. So, until either of these levels are breached, the next leg of trend will remain uncertain.

Considering that the scrip is on an uptrend, the likelihood of the stock moving above ₹530 is high. Should that occur, it will appreciate towards the immediate resistance at ₹575 and could extend the up move to ₹600.

But if the stock breaks below ₹450, it can fall and find support in the price band of ₹375 – ₹400. A decline to these levels can bring in buyers resulting in the resumption of the uptrend.

Published on February 01, 2022
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