A country runs on Roads, Rails, Institutions, Services, Facilities, Power, Dams, Bridges and Rural as well as urban development. This sector is most important in driving India’s overall growth story and thus is enjoying all the attention in recent times from the Government.
Nifty Infra is comprised of 30 stocks which include: Reliance, Larsen & Toubro, Adaniports, ACC, Ultra Tech Cement, ShreeCem, Eicher Motor, Ashok Leyland, Siemens, Container Corporation of India, BPCL, IOC, Apollo Hospital, Indigo and many more. The Nifty Infra is trading under the influence of the bulls and so is most of the stock it comprises of. It has been making higher highs – higher lows since last eight trading sessions and every decline are being bought into.
The index is on the verge of making a golden crossover on the daily chart. A golden crossover is formed when a shorter-term moving average moves above longer-term moving average, which is a strong positive indicator in itself and if the index manages to complete the formation we may see it head towards 3450-3500 zones and above that the bulls may act in full swing and pull the index further high towards 3650 levels, while on the downside the support exits around 3150. In 2017 when the golden crossover was formed in the index, rallied by nearly 35% which is around 1000 points from its low of 2779 to 3748 levels.
PS: The upside rally may not be full of bed of roses and as the name suggests it may be fragile too. So a disciplined approach is a must and maintaining your stop losses is very important. On the downside, the support for the index exists around 3150-3200 levels and below that selling pressure may drag the index towards 3000 levels.
Looking at the stocks that the index comprises of we may conclude that the growth in Nifty Infra may support in the development of other sectors of the economy and thus we may not have to name it as INFRAgile.
Author: Ayushi Bagri, AnandRathi Equity Research, 21st October 2019