Expect volatility to remain high amid expiry, Nifty's 14,900 crucial for trend reversal: Experts

Ajit Mishra, VP Research, Religare Broking | Markets traded volatile for the sixth successive week and lost nearly 2 percent. The sentiment was downbeat from the beginning, mainly in reaction to weak macroeconomic data. Besides, the rise in COVID cases in India further added to the participants’ worries. Meanwhile, indications from the global markets also remained mixed. On the benchmark front, Nifty settled at 14,744; down by 1.9%. Most sectoral indices traded in line with the benchmark and ended lower. The broader indices too witnessed a similar trend and lost nearly 3% each. We expect volatility to remain high next week due to the scheduled derivatives expiry of March month contracts. In absence of any major event, COVID-related updates and performance of the global markets will remain in focus. Markets have been consolidating for the last six weeks and there’s no clarity over the next directional move yet. A decisive move above 14,900 in Nifty might result in a further rebound next week else profit-taking would resume. On the downside, 14,500 would continue to act as critical support. Meanwhile, participants should focus more on the selection of stocks and risk management.

Shabbir Kayyumi, Head of Technical Research at Narnolia Financial Advisors | Indices were painted in red last week as weak global cues, rising bond yields, and fears of Covid-19-led lockdown came to haunt the bulls on Dalal Street. Nifty has formed an opening body bearish Marubozu candlestick pattern and it filled the bullish gap standing around 14,350 marks on Friday. At the same time, India VIX came down by almost 10% in the last week and settled around 20 levels. Though falling volatility index with falling prices of Nifty is creating doubt in the mind about sustainability of the current bearish sentiment, short term bias remains bearish till it is trading below the crucial moving average of 20 DMA standing around 14,900 marks. As momentum oscillators and indicators specifically RSI & Stochastic are trading in oversold zones, one relief rally towards 14,900 marks cannot be ruled out as part of the cooling-off process. Moreover, an early sign of trend reversal will come on a daily close above 14,900 till then Nifty will continue trading lower. Furthermore, any decisive trading above 15,050 will conclude the current correction leg and the new up wave will start.

Joseph Thomas, Head of Research, Emkay Wealth Management on the market | Close on the heels of the overnight losses in the US equity markets, the local market too opened lower and traded in the red during the first half of the trading session on Friday, but swiftly bounced back to a gain almost 1.25%. All the major indexes including banking, IT, Pharma & Healthcare, Tech etc. provided the necessary push to the indexes to surge higher. This is in contrast to the fall seen in the Eastern markets and early Europe. There could be some amount of short covering given the selling seen earlier this week, and also a marked relief with some improvements due to a fall in the oil prices. But the issues surrounding higher, US yields will continue to be material to the markets in the coming weeks. The Fed sees growth and the Fed sees inflation, and so the yields will go higher - this is something that is heard on the street again and again. This may have consequences for equities, though in a limited way, in the coming days. The trajectory of the US markets will be closely followed o some extent, though the domestic economy is likely to post an impressive growth, close to 10%, in in FY22.

Nirali Shah, Head of Equity Research, Samco Securities | Nifty50 index closed on a negative note after witnessing selling pressure throughout the week. The index broke its range of 14,450 to 15,350 but if this break down sustains in the week ahead then only markets can go lower. Otherwise, if markets stabilise at the current levels then Nifty can regain its consolidation within the said range. But any decisive break from these levels can take the index further down to 14,000 in the short term. Traders should keep appropriate stoplosses while taking positions as markets are currently standing at critical levels. A fear of rise in COVID-19 cases is again at the top of an investor’s mind as any new development can impact supply chains and sales of corporates. Furthermore, bond yield movement should also be on one’s radar as it will be a key variable which can dictate future equity movement. There are still some more IPOs in pipeline which can cloud markets for liquidity. Investors are advised to keep sufficient liquidity which can help to take advantage in case of any healthy correction.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities | After showing weakness in the last five sessions, Nifty witnessed a sharp upside bounce on Friday amidst a volatile session and closed the day higher by 186 points. Long bull candle was formed on Friday, after opening lower and this pattern indicate a formation of bullish 'Piercing Line' candlestick pattern. Normally, this bullish pattern is formed at the lows and are part of short term bottom reversals. Hence, one may expect Friday's low of 14350 to be a short term bottom reversal. The sustainable upside bounce from the lower supports and a formation of bullish candlestick pattern of Friday raises hopes for bulls to make a comeback. Further upmove from here could confirm reversal pattern and that could open more upside in the coming sessions 14,900-15,000 levels in the short term. Immediate support is placed at 14,600.

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities | Downward activity in the long term bond yields and weakness in Brent crude have boosted the sentiment of our market. The bullish momentum continued directly from 14,350/48,580 to 14,780/50,000. Heavyweight shares in the index rose sharply. On a weekly basis and daily basis, the market has formed reversal formation after completing the corrective move at 14,350/48,580 levels. Even if the correction is completed, the current rally will be called a pullback until the Nifty / Sensex crosses the 15,350/51,850 levels. The Nifty could go up to 14,850/50,200 and 14,950/50,500 levels. If the correction in bond yields continues, it could benefit the Bank-Nifty. If inflation gets under control, FMCG stocks may also rise. 14,600/49,600 and 14,450/49,200 would remain important supports. Keep a buy-dips strategy for the coming week. Nifty has formed a “bullish piercing pattern”, which means it's has absorbed heavy selling pressure and it ready to move higher.

Rohit Singre, Senior Technical Analyst at LKP Securities | On Friday index closed a day on a positive note at 14,745 with gains of more than one percent and formed bullish piercing candle pattern on the daily chart which stands for a bullish reversal. Once Nifty cross above 14,800 zone, bullish piercing pattern will get active and we may see a good move towards immediate hurdle zone of 14,900-15,000, supports still at 14,650-14,580 zone and holding above said levels, the structure can be positive.

Ashis Biswas, Head of Technical Research at CapitalVia Global Research | The market witnessed some swift recovery from its short-term support around the Nifty50 Index level of 14,400 on Friday. The expected level should range between 14,600-14,900, and it’s going to crucial for the short-term market scenario to sustain above 14,400. Technical evidence is still aligned to support a range-bound trading activity to continue. As such, investors are advised to approach the market from buying in deep while covering seeing a rally to adopt. Multiple momentum indicators are not confirming their bias between themselves. Lack of weight of evidence indicates a sideways market structure is likely.