In the Budget week, the market broke its two-week losing streak and ended with over 2 percent gain amid volatility due to mixed data including decent earnings from Indian Inc., continued FII selling, weak PMI data, rate hike by BoE and hawkish ECB’s stance.
In the last week, BSE Sensex added 1,444.59 points (2.52 percent) to end at 58,644.82, while the Nifty50 rose 414.35 points (2.42 percent) to close at 17,516.3 levels.
All the sectoral indices ended in the green with Nifty Metal index added 6.6 percent, Nifty Pharma index rose 4.6 percent and Nifty FMCG index added 3.6 percent.
Broader indices also performed inline with main indices with BSE Midcap and Smallcap indices added over 2 percent each.
80 smallcap stocks gained between 10-47 percent including Bharat Road Network, Jindal Drilling Industries, Ambika Cotton Mills, Elgi Equipments, MAS Financial Services, Nahar Poly Films, DB Realty, Prime Focus, Gujarat Fluorochemicals, IRB Infrastructure Developers and Genus Power Infrastructures.
On the other hand, Apar Industries, IFB Agro Industries, UTI Asset Management Company, Neuland Laboratories, Gujarat Themis Biosyn, Welspun India, IFB Industries, Multi Commodity Exchange of India and Radico Khaitan remained among major losers.
“The Nifty attempted a bounce in the week gone-by, however faced resistance near the 20 DMA & 61.8% retracement of the Jan decline i.e. near 17770. Thereon it has stepped into a consolidation mode,” said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.
“On the way down it has broken the key hourly & the daily moving averages as well as broken down from a rising channel on the hourly chart.”
“Going ahead, 17400 is a key support to watch out for below which the index can test 17200 in the short term. On the other hand, 17800 will act as the upper end of the short term consolidation range,” Ratnaparkhi added.
The BSE Midcap index rose 2.3 percent supported by Jindal Steel & Power, Info Edge India, Canara Bank, TVS Motor Company, Steel Authority of India, PI Industries, Biocon, United Breweries and Torrent Power.
The BSE 500 index added 2.4 percent with Elgi Equipments, MAS Financial Services, Gujarat Fluorochemicals, IRB Infrastructure Developers, Spandana Sphoorty Financial and Deepak Fertilisers and Petrochemicals Corpn adding over 20 percent each.
“The equity market continued to be in the grip of extreme volatility, which has been a continuous feature of the markets during the whole week,” said Joseph Thomas, Head of Research, Emkay Wealth Management.
“The concerns over rising interest rates in the US, the likely Fed rate action, the build- up of political and military tensions in Eastern Europe, and the adverse effects of the new variant of the pandemic, are all factors that worked on the minds of the investors. These factors, by their very nature, are likely to influence the markets in the coming weeks too,” he added.
Where is Nifty50 headed?
Ajit Mishra, VP – Research, Religare Broking:
On the domestic front, markets will first react to SBI numbers on Monday and the upcoming RBI monetary policy review will also be on the radar. Their commentary on inflation and economic growth will be key factors to watch amid the hawkish stance from the US Fed.
In our opinion, while the benchmark might consolidate further, volatility on the broader front would be hard to handle. We thus recommend maintaining a cautious stance and keeping a check on leveraged positions.
Rupak De, Senior Technical Analyst at LKP Securities:
The consolidation may continue in the short term as long as Nifty remains with the bands of 17400 and 17800. Any directional breakout in the near term may induce further significant move in the market.
Yesha Shah, Head of Equity Research, Samco Securities:
The MPC meeting of the RBI will be a key event for the markets to watch. Unlike its global peers, RBI has been behind the curve and has been downplaying inflation risks. With increased government borrowing announced in the budget, rising global inflation, and a lag in private consumption and investment, D-Street will keep a close eye on the future outlook of monetary policy.
On the global front, markets continue to remain choppy, and investors will be looking for clues from US inflation data to help them determine their next move. In the midst of rising volatility, investors can continue to accumulate quality stocks in a SIP format.
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