While the COVID-19 cases are continuously rising, the market is also rallying on liquidity boost and hopes of a vaccine.
The market gained for the fifth consecutive week as Sensex and Nifty rose 1.2 percent each for the week. Nifty Bank, however, snapped the four-week gaining streak, slipping 1.9 percent this week.
The broader markets underperformed frontline indices as the BSE Midcap index gained a percent, but Smallcap lost 0.17 percent during the week.
Sectorally, the rally was driven by technology, FMCG, Pharma and Energy stocks, whereas Banking & Financials, Power, Realty and Telecom saw selling pressure.
With no major event, experts feel the June quarter earnings season and global cues will continue to dictate the market trend.
While the COVID-19 cases are continuously rising, the market is also rallying on liquidity boost and hopes of a vaccine.
Let's take a look at what experts have to say about the short-term trend of the market:
Vinod Nair, Head of Research at Geojit Financial Services
The markets globally are banking on continued liquidity to ensure that the recent momentum seen in the markets does not stall.
Indian stocks are seeing earnings-specific moves while the ever-present possibility of another lockdown has done little to affect the sentiment.
Jimeet Modi, Founder & CEO Samco Group
Nifty formed a hanging man candlestick pattern on the weekly chart after a narrow range candle in the previous week. This gives the impression that the market is tired of gains and is witnessing a tug of war between bulls and bears, waiting for a bearish trigger.
Bank Nifty has witnessed a big bearish candle after a shooting star in the last week.
We believe the range of 10,900 and 10,950 can unfold as a crucial hurdle for Nifty and expect a limited upside.
Immediate support on the downside is now placed at 10,570 and break of the same may lead to downward decent.
India Inc will carry on with its pseudo-event of earnings season in the coming weeks.
It is expected that Q1 FY21 may not see much pain from the financial space since the real dent will only be felt after the moratorium ends. Hence, markets are expected to flex their muscles in a rangebound manner.
Going ahead, intraday traders can follow a buy on dips strategy in the IT sector and for companies coming out with bad earnings performance.
Investors are still advised to stay on the sidelines and wait for market dips before investing.
Shrikant Chouhan, Executive Vice President - Equity Technical Research at Kotak Securities
On both daily and weekly basis, the market has formed a completely bullish reversal establishment.
The Nifty closed above the starting level of the week, which is an indication of short sale covering or fresh buying from traders and investors.
As the market activity was broad-based and across all the sectors, we are of the opinion that the fresh buying interest has been found in the market.
In the coming week, the market will reach the minimum side level of 11,050 and we see upside till 11,200.
Market support has risen from 10,400 to 10,500. Bank Nifty also returned from 21,000 levels. It could hit the 22,550 or 22,900 level next week.
Financial, Metals, Auto and Pharmaceutical companies should do a better job.
Ajit Mishra, VP Research, Religare Broking
With no major event, the on-going earnings season and global cues will continue to dictate the market trend. Besides, the progress of monsoon will also be closely watched.
Markets are braving all the storms and gradually inching higher, however, the participation is largely limited to a handful of index majors.
The recent surge was led by better than expected earnings from IT majors but the upside seems capped now as Nifty has again reached closer to the resistance zone of 11,000.
Traders should maintain extra caution in the selection of stocks and prefer hedged trades.
Siddharth Khemka, Head – Retail Research, Motilal Oswal Financial Services
After the recent consolidation, the near-term momentum looks positive on the back of positive newsflows around the COVID vaccine.
However, the valuations look stretched at 21 times P/E and given the concerns over US-China trade relations, persistent rise in virus cases and implementation of fresh lockdowns in parts of the country, we would advise traders to remain cautious.
Technically too, Nifty formed a Bullish Candle followed by a Hammer on a daily scale which suggests strong buying interest from key support levels and may witness a fresh leg of the rally above 11,000 zones.
Next week BoJ and China’s interest decision is due which would be keenly tracked. Overall, We would suggest investors continue with their defensive portfolio approach.
Dharmesh Shah, Head – Technical, ICICI direct
We reiterate our positive stance on Nifty over medium-term and expect the index to head towards 11,400 levels by August 2020.
We believe, the rally towards 11,400 is likely to be gradual as the index has rallied 15 percent in the past five weeks, thereby pushing weekly stochastic oscillator to the overbought reading of 97.
This could result in temporary episodes of minor profit-booking at higher levels.
However, we believe such a breather should not be construed as negative, instead, it should be capitalised to accumulate quality stocks amid ongoing Q1 FY21 result season to ride the up move towards 11,400 as it is 80 percent retracement of entire CY20 decline (12,430 – 7,511), placed at 11,445.
The formation of a higher peak and trough on the weekly chart signifies the continuance of the positive bias which make us confident of maintaining support base at 10,600 as- 1) it is the confluence of 38.2 percent retracement of ongoing up move (10,195 – 10,933), at 10,651 and 2) during past four weeks on multiple occasions index reacted from 10600 zones.
As per the change of polarity concept, previous resistance of 10,600 would now act as support. Last week’s low is placed at 10,563.
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