Further correction or a high jump? Here's how top market analysts foresee the market trend for the coming week

After a stellar record-setting rally, the Indian market seems to be in the consolidation mood. Equity benchmarks the Sensex and the Nifty have been ending in the red for the last four consecutive sessions.

The Sensex and Nifty lost more than a percent in the week ended February 19, while BSE midcap and smallcap indices outperformed with gains of 0.63 and 1.23 percent, respectively.

Market experts point out that such consolidation is in-line with expectations and should be used to accumulate quality stocks as the long-term outlook of the market remains positive.

In days to come, global cues will continue dominating market sentiment. The market will also observe the sudden spike in Covid-19 cases in some parts of the country.

As per a PTI report, quoting the Union Health Ministry, Kerala, Maharashtra, Punjab, Chhattisgarh and Madhya Pradesh have recorded an upsurge in daily new cases of Covid-19.

We expect volatility to remain high in the coming week due to the scheduled expiry of February month derivatives contracts. On the data front, participants will be eyeing the important macroeconomic data viz. GDP numbers and core sector data on February 26. Besides, the update on COVID cases will also remain on their radar.

We’re seeing a healthy correction in the markets however position management becomes difficult during such phases. A decisive break below 14,800 may result in a further slide in Nifty. On the downside, the 14,450-14,650 zone would act as a cushion. Considering the scenario, we advise limiting naked leveraged positions and keeping extra caution in the selection of stocks.

During the coming week, we expect investor interest to come back to large banks as FPI flows this month are at over Rs 24,000 crore which reflects the appetite of foreign funds.

We expect the domestic market to continue following the global markets in the coming week due to the lack of any major domestic events.

GDP data for the third quarter is to be released towards the end of next week which is expected to show the signs of economic recovery adding positive momentum to the Indian market.

The market may continue consolidating for some time till the concerns over the rising bond yields and inflation recede.

Even the spike in virus cases is worrying the market. Further, Nifty valuations at nearly 21 times FY22 EPS are not inexpensive anymore and demand consistent earnings delivery ahead.

Rising bond yields may cap equity valuations as the RBI may have to do a balancing act to keep bond yields at lower levels while managing the government borrowing program.

Technically, Nifty formed a bearish engulfing candle on the weekly scale. Now, till it remains below 15,150, weakness could continue towards the next key support of 14,800-14,700 while on the upside, hurdles are seen at 15,250-15,400.

The market would track rising inflation, increasing Covid cases along with prospective US stimulus in the near-term for further direction.

In the coming week, investors should be cautious about benchmark indices and take note of any major movements in the global markets.

Going ahead, markets are expected to remain dull and range-bound in absence of any major positive triggers. Therefore, investors are suggested to count on this opportunity to alter their portfolios by withdrawing monies from the weaker quality stocks and investing new monies in quality bets only on dips.

Additionally, it also appears that the market is in a longer-term bull rally with an intermediate top in the making.

Nifty has made a bearish engulfing candlestick pattern which indicates price rejection at higher levels.

The bulls are getting tired as the index is trading much higher than its mean levels and at accelerated rising channel resistance.

Hence, a brief corrective dip cannot be ruled out. Nifty has broken the immediate support of 15,050 and a sustained price move below the support can trigger some more profit-booking.

The market has come off a bit in the last four sessions but structurally there is no major damage done on the charts. It should merely be considered as profit-booking as of now.

Going ahead, we need to keep a close eye on how Nifty behaves around its key support zone of 14,750 – 14,550.

Only a sustainable breach of these crucial levels should be considered as a short-term trend reversal.

On the flip side, 15,100 – 15,200 would be seen as immediate hurdles and any bounce towards this is most likely to get sold into.

The key factors for the market to watch out for include the trend of inflation in many global commodities like crude oil and steel, the continuation of surplus global liquidity and low global interest rates, and the trajectory of domestic corporate earnings over the next few quarters.

The Covid-19 case curve and the pace of vaccinations are also the key factors that will dictate the mood of the market.

Nifty formed a bearish engulfing kind of candle pattern on the weekly chart which represents trend reversal.

As the index managed to breach its strong support of 15,000 mark which will act as an immediate resistance now so above the 15,000 mark, we may see some relief otherwise we may see more downside levels of 14,900-14,750.

On the other hand, 15,100-15,170 will act as a strong hurdle on the higher side.

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