Dear
Trader…
As expected,
Indian shares rebounded on Thursday to close higher, helped by Banking –
Finance and metal stocks, while a second surge in domestic corona virus cases
and fears over its impact on the economy capped gains. The pullback is also
supported by a strong rally happening in global markets.
The bulls
seem to be ignoring the spike in COVID-19 cases in India and across the globe
and also the rise in the dollar index as well as US treasury yields. we
continue to believe that a near-term possible correction in the market would be
creating an opportunity for bargain trading for investors.
Nifty
futures opened at 14574.00 points against the previous close of 14541.15 and
opened at a low of 14374.25 points. Nifty Future closed with an average
movement of 241.25 points and a rise of around 58.85 points and 14600.00 points
.. !!!
On the NSE,
the midcap 100 index will rise 0.06% and smallcap 100 index is closing down
0.19%. As far as various sectoral indices are concerned, only auto, FMCG,
media, PSU bank and realty stocks were seen selling on the NSE, while all other
sectoral indices closed higher.
At the start
of intra-day trading, june gold opened at Rs.46680, fell from a high of
Rs.46896 points to a low of Rs.46680, with a rise of 236 points, a trend of
around Rs.46844 and May Silver opened at Rs.67708, fell from a high of Rs.
68170 points to a low of Rs.67705, with a rise of 342 points, a trend of around
Rs.67980..!!
Sentiments
were dampened as firmer prices of crude oil, petroleum products and basic metal
drove India’s inflation based on wholesale price index (WPI) to 7.39%
(provisional) for the month of March 2021 over March 2020. Traders took note of
report of Indian industry bodies stating that the imposition of stricter
lockdown in Maharashtra will help slow the transmission of corona virus but it
will have a deep impact on the state’s economy.
With the
surge in corona virus cases across the country once again, India is at risk of
weakening the economic recovery which poses a credit negative threat, Moody’s
Investors Service said. “However, the targeted nature of containment
measures and rapid progress on vaccinating the population will mitigate the
credit-negative impact. Moody’s further predicted that the GDP was still likely
to grow in the double digits in 2021 given the low level of activity in 2020.
The Nifty
valuations appear to be stretched and the required earnings growth to sustain
valuations is fairly high. Hence, any negative development or adverse news flow
might lead to a sharp selloff. The second wave of COVID-19 may impact market in
short term, but remain optimistic about economic and earnings growth which
could continue supporting the market.
We expect
volatility to continue until there is clarity over the lockdown situation and
availability of vaccines. The earnings season would further add to the
choppiness ahead so we suggest investors maintaining stock-specific trading
approach. Meanwhile, global cues, metals and crude oil prices would also be on
investors’ radar.
Technically, the important key resistances are placed at 14606 levels, which could offer for the market on the higher side. Sustainability above this zone would signal opens the door for a directional up move with immediate resistances seen at 14676 – 14707 levels. Immediate support is placed at 14474 – 14404 levels.
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