The Nifty50 might rally back to 9,700 if corona cases are brought in control else we could see the Nifty dragging back and possibly even break its recent low of 7,511, Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpt:
Q) Last week was very volatile for the markets, but we managed to bounce back from 7,511. What is your take on the market action?
A) Indian equity markets started the week on a negative note. It started to recover from its recent low. Last week, the US approved$2 trillion stimulus package to respond to the COVID-19 pandemic which helped the market cut some losses.
The Indian market also recovered from its 4-year low after the Indian government announced a $22.5 billion relief package coupled with the rate cut.
This is the wildest time for the market in all kinds of market categories. On 27th March 2020, indices ended almost flat, however banking stocks gained after RBI Governor announced a massive 75 basis points cut in repo rates and 90 basis points cut in reverse repo rate to increase liquidity in the system.
Currently, we are nowhere close to overcoming the COVID-19 crisis. If we see a peak in cases in India and globally for another two to three weeks, (as we saw on Thursday in India when the highest number of people died in a day) then we could see the Nifty dropping back and might possibly even break its recent low. Otherwise, it might rally back to 9,700.
Q) After registering a series on series fall of more than 25% in March, what is the sense you are getting for the April series?
A) The rally which started after 2008 crises to the peak point, the Nifty has retraced nearly 50 percent of the gains from the recent all-time high of 12,430 which was made in January 2020.
The index has declined as much as 32.95 percent in the month of March so far. In April, we can say that Nifty might rally if Corona cases (domestically as well as globally) are in control.
If not, then we could see the Nifty dragging back. Stocks that investors should watch out for are Kotak Mahindra Bank Limited and Reliance Industries Limited.
Q) What is your take on the package which the government announced in the week gone by, and the steps taken by RBI?
A) On the last trading session of the week, indices ended almost flat after the RBI Governor announced a 75 & 90 basis points cut in the repo and reverse repo rate respectively to increase liquidity in the system and central government announced a relief package of Rs 1.7 lakh crore to respond to the Corona pandemic.
About 80 crore people will get benefit from the relief package. So, steps taken by the RBI and Indian government are in the right direction.
Apart from this for the fiscal year 2020-21, the government will also increase its borrowing plan. The government is planning to increase gross borrowing to Rs. 7.8 trillion.
Q) How is the month of April likely to pan out for investors? Do you think we could get past 10,000 on the Nifty?
A) Recently, the volatility index which is a measure of the market’s expectation of volatility over the near term is at the highest level since 2008.
Indian indices were given choppy movement on Friday after RBI Governor announced a massive 75 basis points cut in repo rates and 90 basis points cut in reverse repo rate to respond to the COVID-19 pandemic.
The Nifty50 might rally back to 9,700 if corona cases are in control else then we could see the Nifty dragging back and possibly even break its recent low of 7511.
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