The recent buoyancy in the stock markets is likely to continue into the next week and till the June month derivative expiry, experts say. This is on the back of the sensational near 5 per cent recovery that Nifty and Sensex made on Friday.

Also, experts are confident that markets may not witness a sharp fall like in May mainly as they see the share price of Reliance Industries (RIL), which has the highest weightage in Sensex and Nifty not giving away to the bears as it was on its path to become a nearly debt-free company after a slew of investments from foreign investors and mop-up of ₹53,000 crore in the rights issue. Still US market volatility will be closely watched.

Friday’s market fall where the Sensex and Nifty had crashed severely was triggered on the back of a sharp overnight fall in the US markets on Thursday. The Dow Jones index fell by 1,850 points or nearly 7 per cent and the Nasdaq was down more than 500 points or around 6 per cent. But the Friday market moves in the US suggested that the fall may not get intense further, which came on the back of reports that a second wave of Covid-19 was hitting the US.

However, US Treasury Secretary Steave Mnuchin clarified later that they cannot close down the economy any more. Also, over the weekend global pharma major AstraZeneca said it had reached a deal to supply 400 million doses to four European countries. The US Federal Reserve has said that it will keep lending money at near zero interest rates through 2022.

“Since April, the Nifty index is making new highs and does not seem to be falling beyond the previous low. Meaning, it does not take out the old low levels. The Friday’s Nifty low of around 9,500 levels was beyond the worst estimated level after the recent rally. The index rose significantly higher from there Friday's lows in just hours. The sharp move up was reassuring of the trend, which remained up,” said Rohit Srivastava, strategist, Indiacharts.

Also, there is a view in the market that banking stocks may not see another sharp plunge as highly leveraged derivative positions in those counters did not exist as they did during the start of this year. Leverage derivative bets are the first to get shaken off when the markets are volatile and the impact is a swift fall often.

“Although we are in a confirmed uptrend, our approach turned cautious toward the market. We are ready to book smaller than usual profits if any selling pressure is observed. If we see Nifty add more distribution days, breaching key moving averages and begin to see leaders falter at support, we will likely shift the market status to an uptrend under pressure,” MarketSmith India, a research house, said in its big picture report.