Rise, fall, repeat — market trend perplexing, top 6 analysts tell us what lies ahead

Rising COVID-19 cases and weak global cues kept stocks under pressure in the week gone by, dragging the Sensex and the Nifty lower by almost 2 percent as the market extended its losing run into the third consecutive week.

A trend of profit-booking at every rally has been observed, keeping the market in a range. After every fall, the market rises, making it difficult for investors and traders to anticipate the mood of the market.

"Markets have fallen globally. The next few weeks will tell us the direction. The race now is between COVID cases and the number of vaccination taking place," Andrew Holland, CEO of Avendus Alternate Strategies told CNBC-TV18 in an interview.

Gautam Shah, Founder & Chief Strategist, Goldilocks Premium Research, told the channel that in the past, when the Nifty corrected, it fell, tested supports, came back strongly and made new highs. That pattern had not been seen in the last two to two-and-a-half weeks.

"At this point in time, there are no signs of bottoming out, so while there could be pullbacks time-to-time, I do not think they will sustain," Shah said.

This week is a truncated one as the market will be shut on March 29 for Holi and April 2 for Good Friday.

Analysts advise not to panic as volatility is likely to persist. Here is how  top market analysts foresee the market trend for the short-term:

Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities

Investors will likely take a fresh view at the start of the new fiscal year that begins April 1. On the economic front, weekly activity indicators such as e-way bills remained strong. E-way bills generated through March 1, 2021-March 21, 2021 increased 4 percent from the comparable period in February 2021.

While COVID-19 cases are going up, the pace of vaccination is also accelerating. With fresh restrictions and faster vaccination, we can expect sentiment to remain positive at the start of the new fiscal year.

The earnings season will also kick in from the second week of April, which could turn out to be the driver for stocks. We expect markets to remain volatile, as the Nifty50 closed below the 50-DMA, which was around 14,765, in the previous week.

Logically, markets should see some uptick from the first week of April. If this does not materialise, then Nifty could drift towards 13,500-13,600.

Dharmesh Shah, Head – Technical, ICICI direct

We expect the Nifty to hold 13,900. Do not panic if it declines further and use the opportunity to construct a portfolio for the medium term.

In this truncated week, the Nifty is expected to trade in the 14,200-14,800 range.

IT, pharma, financials and FMCG are the preferred sectors. TCS, Asian Paints, HUL, HDFC, Reliance Industries, Divi's Laboratories are preferred stocks along with FSL, Birla Soft, Balkrishna Industries and Tata Chemicals.

Ajit Mishra, VP Research, Religare Broking

This week is a holiday-shortened one and we expect volatility to remain high. It also marks the beginning of a new month, so macroeconomic data like core sector and auto sales numbers will be in focus.

Besides, updates related to the COVID situation in India and cues from the global markets will also be closely tracked by the participants.

The recent surge in the COVID cases combined with feeble global cues has turned the participants cautious. Besides, the divergence between the Nifty and the banking index amid excessive volatility is keeping the traders guessing over the next directional move.

The negative bias in the Nifty would reverse on the breakout above the short-term moving average (20 EMA), which lies around 14,760. On the flip side, the next major support exists at 14,000. We feel traders should limit leveraged positions until some clarity emerges.

Siddharth Khemka, Head–Retail Research, Broking & Distribution, MOFSL

The Nifty has to cross and hold above 14,550 for a bounce towards 14,675 and 14,800, while on the downside, support exists at 14,400 and 14,250.

For Indian markets, this is a truncated week, hence traders will track global cues closely.

With high volatility likely to continue for some time, investors will do well by staying calm and gradually accumulating quality companies on declines.

Nirali Shah, Head - Equity Research, Samco Securities

As long as the Nifty trades above the 14,300 level, a short-term bounce cannot be ruled out. Traders can maintain a mildly bullish outlook as the immediate resistance for Nifty now lies at 14,900.

With no major events this week, markets may continue to remain volatile, especially because of rising COVID-19 cases and fears of a lockdown.

D-Street may continue to witness new IPOs as we close in on the last trading week of the financial year.

As it will be a three-day week, investors can look for knee-jerk reactions in stocks as an interesting opportunity to buy and commit a tiny proportion of fresh capital for the longer term before the start of Q4 earnings in April.

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

On March 25, the market stopped at a large support area and formed a bullish Harami pattern the next day, which indicates that the coming sessions may be positive for the market.

On the weekly basis, the market completed a corrective pattern and the Nifty could see a level of 14,750 or 14,900 until it breaks to 14,250.

The Bank Nifty is also expected to move to 34,700, above the resistance at 33,700.

The focus should be on FMCG and capital goods. In the previous week, the dollar index was the biggest factor that dragged the sentiment of the market. This week, too, the trend would largely depend on the dollar index.