Investors Turn Optimistic On Policy Push After BJP’s Victory In Delhi

Amidst heightened volatility triggered led uncertain tariff policies by the US President Trump, mixed corporate earnings and expected 25bps rate cut by RBI; the domestic stock market had a roller-coaster ride and extended gains for the second consecutive week. BSE Sensex added 354.23 points or 0.45 percent to finish at 77,860.19, while NSE Nifty rose 77.8 points or 0.33 percent to close at 23,559.95 points. Broader market witnessed bouts of stock-specific selling on the back of results announcements. The BSE Mid-cap Index added 0.4 per cent and the BSE Small-cap Index ended flat. Continuing their selling, Foreign Institutional Investors (FIIs) sold equities worth Rs8,852.31 crore, while Domestic Institutional Investors (DIIs) bought equities worth Rs6,449.67 crore. The Indian rupee tested fresh record low of 87.59 during the course ofthe week and ended 81 paise lower at 87.42 per dollar. A weaker rupee erodes returns for foreign investors, making Indian assets relatively less attractive and adding to the pressure on FPI lows. The Reserve Bank ofIndia’s (RBI) announcement of the expected rate cut of 25-basis point tostimulate growth, particularly after the Union Budget emphasized consumption over capital expenditure turned out to be a non-event for the markets.

The recent Union Budget presented a comprehensive approach todriving economic growth, with a focus on fiscal prudence, tax rationalization, infrastructure development, ease of doing business (EoDB), agriculture, and supporting various sectors. Overall, despite the current market downturn, India’s economic growth prospects appear promising, driven by a combination of fiscal prudence, monetary policy support, and strategic investments in key sectors. The markets will keep an eye on any comments by US President Donald Trump regarding the economy and geopolitics. Prime Minister Narendra Modi is scheduled to visit the USA next week, on February 12-13, where he will interact with Trump and senior US officials. BJP victory in Delhi elections could reinforce confidence in governance and economic policies, with FIIs likely to react positively due to the perceived policy predictability under a BJP-led administration. It is pertinent to observe that according to valuation guru Aswath Damodaran, the Indian stock market is the most expensive and no amount of ‘hand – waving’ can justify the present valuations.

Follow the market trends and history. Don’t speculate that this particular time will be any different. For example, a major key to investing in a specific stock or mutual fund is its performance over five years.

F&O / SECTOR WATCH

On the back of global cues, the derivatives segment witnessed sharp swings in several stock futures. Both the Nifty and the Bank Nifty closed on apositive note, with Bank Nifty outperforming, gaining over 1.25 per cent weekly. Among the sectors, the Healthcare index surged the most last week. The index was up 3.12 per cent. The FMCG index, down 5.21 per cent was down the most. In the options market, prominent Call Open Interest for Nifty seen at the 24,000 and 23,800 strikes, while the notable Put open interest was at the 23,500 and 23,000 strikes.

For Bank Nifty, the prominent Call Open Interest was seen at the 51,000 strike, whereas notable Put OI at the 50,000 strike. Implied Volatility (IV) for Nifty’s Call options settled at 13.19 per cent, while Put options conclude at 14.26 per cent. The India VIX, akey market volatility indicator, closed the week at 14.18 per cent. The Put-Call Ratio of Open Interest (PCR OI) for the week was 1.04. In the short-term, supports are at 23,400 and 23,285. As long as the Nifty stays above these supports, the bias will remain positive. The outlook for the Bank Nifty is bullish with a Double Bottom pattern formation on the chart. Supports are now at 49,800 and 49,300. Beleaguered bank stocks got fillip with RBI’s liquidity measures through Open Market Operations (OMO) and Variable Reverse Repo (VRR) auctions. The steps demonstrate RBI’s commitment to boosting liquidity, reviving demand, and driving economic growth.

Stocks looking good Alkem, Bharti Airtel, Cholamandalam Finance, Dr Reddy, Glenmark, JSW Steel, Zydus Life. Stocks looking weak Atul, Berger Paints, Bank of Baroda, Colgate, Solar Inds, NBCC and Phoenix.

Technically, Nifty is trading near its 200EMA on the daily chart, while Bank Nifty remains range-bound between the 100 and 200EMA. Both indices are sell-on-rise unless they sustain above their EMAs. Nifty has support at 23,200 and 23,100, with resistance at 24,000. The central bank cut the reporate by 25bps after nearly five years, but the market failed to hold gains. Pharma, Metal, and Healthcare were the top gainers, while Realty and FMCG faced selling pressure on weekly basis.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)

STOCK PICKS

Lemon Tree Hotels Ltd

Lemon Tree Hotels Ltd is an all India-based hotel chain company. Thecompany offers hotel service including accommodation/ rooms, dining, bar, banquets, conference, meeting rooms, spa, fitness center, swimming pool, and more. The company’s segments include Upscale segment, Upper Mid-Scale segment, Mid-Scale segment, And Economy segment. The company operates through various brands, including Aurika Hotels and Resorts, Lemon Tree Premier, Lemon Tree Hotels, Red Fox Hotels, Keys Prima, Keys Select and Keys Lite.

The Company operates approximately 8,382 rooms in 88 hotels across 56 destinations, in India and abroad, under itsvarious brands. The company’s hotels are located across India, in metroregions including the NCR, Mumbai, Kolkata, Bengaluru, Hyderabad and Chennai, as well as numerous other tier-I and tier-II cities such as Pune, Ahmedabad, Chandigarh, Jaipur, Indore, Aurangabad, Udaipur, Vishakhapatnam, Kochi, Ludhiana, Thiruvananthapuram and Vijayawada. The company has started to reap some benefits from the growing demand for premium hotels.

The ongoing premiumization in the mid-market hotels space boosted Lemon Tree’s consolidated average room rate (ARR) by 12% year-on-year to Rs5,902 in the July-September quarter (Q2FY25), aiding revenue per available room—or RevPAR, a key measure of a hotel’s performance. Lemon Tree plans to spend Rs300 crore on renovations over the next three years, which is likely to generate some short-term margin pain for the company. Value unlocking for Lemon Tree after the listing of Fleur Hotels may give fillip to its stock price. Buy on declines for medium-term target of Rs200.