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A good beginning makes a good ending; will this hold true for Indian markets?

Karan DSIJ
·3-min read

The bulls are likely to begin the fresh week on a jubilant note as well as continue to extend its Friday’s rally as cues from the Asian peers are supporting the bullish chorus. Further, a daily tabloid reported that the Coronavirus epidemic in India may have already peaked. SGX Nifty is indicating that Nifty may open around 11,846 levels, up by 74 points.

Now, the major question in the mind of investors and traders is that will this rally be sustainable or is it just a pullback after a massive sell-off on Thursday. Last Thursday’s sell-off more or less resembles the fall that was seen on August 31. Post the sharp fall of August 31, the index witnessed a pullback that lasted up to the 50 per cent retracement (mid-point) of the big bearish bar of August 31.

On Friday, the index managed to hold above the lows of Thursday and as per the most important assumption in technical analysis that history repeats itself, we could see the current pullback rally continue its pullback up to the mid-point of the big bearish candle of Thursday. So, the pullback may extend towards 11,880-11,910 levels. Hence, it is advised to maintain a cautious approach around these levels.

On the earnings front, ACC, Britannia, and HDFC Life are some of the key stocks scheduled to report its earnings today. Further, the largest private sector bank of the country i.e. HDFC Bank would be the centre of attraction today as, over the weekend, it reported its earnings and the company reported profit growth of 18.4 per cent YoY.

Asian stocks are seen advancing at the start of the week despite tepid cues from Wall Street on Friday. The report suggested that the Coronavirus vaccine development in the UK could happen by New Year and this is acting as music to the ears of the bulls. Hong Kong’s Hang Seng and Japan’s Nikkei 225 were up by 1.49 per cent and 1.19 per cent, respectively while China’s Shanghai Composite surged 0.83 per cent.

Indian benchmark indices ended the final trading session of the week on a bullish note with Nifty and Sensex adding 0.70 per cent and 0.64 per cent, respectively. The broader indices outperformed the frontline gauges with Nifty Mid-cap and Small-cap surging 1.13 per cent and 1.39 per cent, respectively.

Meanwhile, on the sectoral front, barring Nifty IT and Nifty Media, all other sectoral indices ended in green wherein Nifty Metal, Nifty Realty, Nifty Private Bank and Nifty Bank were the top performers.

In the initial part of Friday’s session, the stocks on Wall Street were seen jumping with joy amid an unexpected jump in retail sales and a rise in consumer sentiment. However, the initial optimism started to fade as, during the later part of the day, profit booking dragged the indices lower. The tech-heavy Nasdaq ended down by 0.4 per cent, while Dow added 0.4 and S&P ended near the neutral line. Meanwhile, the European indices staged a smart recovery on Friday and ended with robust gains.