Analyst Somesh View - Closing Comments on April 5

2021-04-05 20:06:23 By Marepally Krishna

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Nifty formed a bearish candle on the daily chart as the closing was lower than opening level, though it witnessed some buying at lower level.

 

Nifty opened lower at 14837 and remained under pressure to hit a day's low of 14459. Nifty settled at 14637, down 229 points or 1.54 percent.

 

Nifty erased all its previous session's gains and fell 1.5 percent as a sharp spike in coronavirus cases in the country dented sentiment. All leading sectors, barring IT and Metal, witnessed selling pressure.

 

Market witnessed a huge sell off today as India’s second wave of Covid-19 is getting bigger than anticipated and is expected to ruin the pace of economic recovery. High valuation added further concern due to a possible downgrade in Q1FY22 earnings. Barring IT, metal and telecom, all sectors remained in the red. A policy decision in the upcoming MPC announcement and Q4 earnings will define the market volatility in the coming days.

 

Markets opened gap down following strict guidelines issued in Maharashtra amidst rising coronavirus cases with BFSI and rate sensitives taking a knock ahead of the monetary policy. However, technology, steel and pathology labs bucked the downtrend and posted handsome gains.

 

The week started on a negative note for the Indian markets mainly due to sharp surge in COVID-19 cases across the country. Despite, stable global cues, the Indian indices lost its ground and ended with losses of nearly 1.5% to end at 14638 level. Broader markets too were not spared as both Midcap and Smallcap ended with losses of nearly 1% each. On the sector front, IT, healthcare and metals ended with healthy gains whereas banking, auto, and realty were the top losers.

 

Sharp surge in COVID-19 cases has dented investor sentiments and has increased fear of harsh restrictions which would impact economic activity. Going forward, government actions to curb the surge would be one of the important factors to watch out for investors. Further, the upcoming RBI monetary policy would be actively tracked by investors. We expect the RBI to maintain its dovish stance and leave key rates to be unchanged.

 

Nifty recovered around 180 points from its intraday low of 14459 level, it seems to have resumed its downswing as Nifty witnessed sharp downswing of 390 points with negative advance decline ratio which decisively skewed in favour of bear.

 

Hence, strength in the index will not be expected unless Nifty registers a close above 14850 level and till then the trajectory of this market shall be on a slippery slope with initial targets of 14459 level.

 

As trend appears to have tilted in favour of bears, the possibility of index testing recent corrective swing low of 14264 shall remain higher.

 

Therefore, for the time being, Traders to avoid long side bets whereas aggressive traders with high risk appetite shall consider any bounce into the zone of 14700/14750 to create fresh positional shorts with a stop above 14850 level on a closing basis and look for an initial target of 14450.

 

On the sectoral front, Nifty PSU Bank index slipped 4 percent, Nifty Bank index shed over 3 percent and auto index declined more than 2 percent. However, IT index gained 2 percent.

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