In the coming week, the market will be focussing on the government's announcement regarding the lockdown and the geopolitical developments.
Equity benchmarks concluded the truncated week on a buoyant note tracking positive global cues.
The Nifty ended the week at 9,580, up 6 percent. Broader market performed in tandem with the benchmark as Nifty Mid-cap, Small-cap rose 4 percent each. Sectorally, all major indices ended the week in the green lead by financials, metal and auto.
Nifty50 has begun the June Futures & Options (F&O) series on the back of the positive sentiment. Trend support is seen at 8,800 and buying on dips is advisable. Maximum open interest (OI) is seen at 9,000 strike Put Options and 10,000 strike Call Options. This indicates the broader range for the June series.
In the coming week, the market will be focussing on the government's announcement regarding the lockdown and the geopolitical developments.
Here's what eminent experts of D-Street have to say about the market:
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services
The lockdown 4.0 is coming to an end on May 31, thus market would keep a close eye on further announcements from the government over lockdown extension along with easing of restrictions.
Auto monthly sales data for the month of May will start coming from Monday which would reflect consumer sentiment.
On the positive side, as per Indian Meteorological Department (IMD), monsoon is likely to reach Kerala early next week which would be closely tracked.
Gautam Shah, Founder and Chief Strategist at Goldilocks Premium Research
Battling the COVID-19 storm, the Indian market has shown resilience and it looks like, with Nifty50 trading around 9,500, most of the bad news is already in the price, but the big ‘fortune making’ opportunity lies in the small and mid-cap space.
A lot of mid-caps have corrected significantly in the recent market fall. I think there is a great opportunity in the mid and small-cap segments if someone has a time frame of three to five years.
Atul Bhole, Senior Vice President – Investments, DSP Investment Managers
In this market, a pessimist will sound smart but ultimately an optimist will make money. This is clearly an episode of greed and fear, fear has taken over the minds of investors while actually they need to start evaluating investment opportunities.
Undoubtedly the hit to the economy due to COVID-19 induced lockdown is massive, but we believe, to a large extent it is in stock prices, at least in part of markets like financials and discretionary consumer companies.
Let us not forget that markets are at oversold levels and have upside risks too in the form of discovery of COVID-19, government, stimulus, etc.
Investors should start dabbling now and look to invest till year-end as other risks like United States-China relations, US Elections will also pan out by that time. Catching the exact market bottom will always remain an elusive dream.
Sanjeev Zarbade, VP PCG Research, Kotak Securities
The week was one of the best for global markets as most major global indices rallied during the week. The Sensex which has been underperforming the MSCI emerging markets also delivered a strong rally with gains of 5.3 percent for the week.
Most state governments have further relaxed lockdown norms in the current phase as well as allowing domestic air-travel to resume. Tensions between India and China and China and the US remain a concern for the markets. Also, any acceleration in coronavirus infections could further slow down the lifting of lockdown and delay any economic recovery. Notwithstanding the near-term uncertainty, valuations are attractive on a medium-term basis.
Ajit Mishra, VP - Research, Religare Broking
We might see a pause after the recent surge but the bias would remain on the positive side, citing the potential of a further surge in the banking index. Traders should focus more on stock selection while maintaining a “buy on dips” approach.
S Hariharan, Head - Sales Trading, Emkay Global Financial Services
For the coming month, any escalation in the US-China geopolitical tensions can act as the biggest risk to a continued rally, as passive fund flows have been supportive for EMs broadly.
In the absence of geopolitical flare-ups, we could see a rotation of flows into financials and second-rung consumer stocks in the coming month, as a wider opening up of the economy helps sentiment.
Stocks facing the rural and agri-economy would benefit from the progress of a normal monsoon as it impacts the progress of Kharif sowing.
Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote
Going ahead, markets will look up to the most buzzing word on the street -‘lockdown’. Markets will take cues from the decision of ending lockdown 4.0 which is expected to cease at the end of the month.
If the lockdown extends, it would without a doubt create increased pressure on our financial system which might culminate into a knee jerk reaction in the stock market especially the financial stocks.
If the lockdown subsides, bourses might witness a relief rally but investors should stay away and in fact book profits as this rally might be short-lived.
Oracle of Omaha, Warren Buffett says: "The stock market is a device for transferring money from the impatient to the patient." Hence, investors are advised to be patient and not invest any new monies but wait till markets adjust to ground realities.
Dharmesh Shah, Head – Technical, ICICI direct
We expect rallies to get elongated amid shallow price corrections. Thereby, we have revised the support base upward at 9,200 as it is 50 percent retracement of ongoing up move (8,806-9,599) at 9,206.
We believe, any cool off from here on should not be considered as negative, instead it should be capitalised as incremental buying opportunity to ride next leg of the up move.
Structurally, Nifty maintained the rhythm of arresting secondary corrective move near 61.8 percent of the subsequent up move, since March 2020.
In the current scenario, Nifty staged a strong pullback after anchoring secondary correction near 61.8 percent retracement of April 2020 up move (8,055-9,890), at 8,800. The formation of higher peak and trough along with broad-based participation signifies a robust price structure, auguring well for the next leg of the up move.
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