Dear
Trader…
As expected, Nifty future opened with a
selling pressure throughout the session dragged it lower on a negative note and
Nifty future closed at 14642.55 with a loss of 344.45 points.
Domestic equities rose sharply in the first
two weeks of February thanks to solid corporate earnings and a well-received
federal budget, but markets have pared some of those gains in recent sessions
due to profit-taking.
The rise in bond yields and news of fresh COVID-19
restrictions is factors that are adding to investor worries until there is more
clarity on how the situation evolves, people are booking some gains. MSCI’s All
Country World Index was down 0.4% on Monday as expectations for faster economic
growth and inflation globally battered bonds and boosted commodities.
In domestic trading, Maruti closed down 3.44%, Dr Reddy at
4.16% and Reliance Industries closed down 3.5% and was the biggest drag on the
indexes after India’s top court barred a final ruling by a tribunal reviewing
the conglomerate’s deal to buy Future Group’s retail assets.
The results were weaker than expected in the final phase of
the season and the alarming rise in the number of new positive cases of corona
in Kerala and Maharashtra led to fears of another massive lockdown and cautious
signs of further economic turmoil in the coming days.
Caution will now be needed as the financial sector stabilizes
in the coming days and valuations in the Indian equity market are high. The UBS
Securities report also said that US and British investors are focusing on
India’s medium-term growth potential and are optimistic, while Asian investors
are expressing concern over the high valuation of the market.
Volatility index has stayed below 22 levels throughout the
week despite profit booking being seen in the index. The current reading
suggests some consolidation in the index in the near term. Only move above 23
should be considered as a caution for equities.
We expect volatility to remain high and current Put base of
15000 strikes should act as immediate support for the index. Below this, VWAP
levels of the series near 14808 are likely to act as major support for the
February settlement. On the higher side, intermediate hurdle can be seen at 14808
levels, which have gained significant OI in the last few sessions.
A round of short covering is expected from the Reliance. HDFC
and Banking and technology space, which have seen continued to rise in the next
series.
The Indian stock market will also be keeping a close eye on
the situation, with petrol and diesel prices reaching record highs following
the recent rise in international crude oil prices.
In my opinion, it would be advisable to book profits in every
bullish trend as the market has reached an all-time high with an unprecedented
historic rally in just one year after the Corona epidemic hit the Indian stock
market.
On the chart pattern suggests that if Nifty future crosses and sustains above 14707 levels it would witness buying which would lead towards 14777- 14808 levels. However if index breaks below 14606 levels it would witness selling which would take towards 14570-14533.
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