For the week ended April 23, the Indian market benchmarks, the Sensex and the Nifty, fell 2 percent each, extending their losing run into the third consecutive week.
COVID-19 and subsequent lockdowns are continuing to keep investors nervous and looking for cues to understand the trajectory of market which has resulted in high volatility.
Sensex is down 9 percent while Nifty has retreated 7 percent from respective peaks hit in February 2021.
The market may experience high volatility in the current week also due to the expiry of April F&O contracts as well as the upcoming FOMC meeting on April 27-28. Besides, investors will also keep an eye on COVID-19 cases and the extension of lockdown in states.
Moneycontrol talked to several market experts to understand the mood of the market for the short term. Here's what they have to say:
1. Expert: Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities
Fresh lockdowns and restrictions being imposed by various state governments will impact demand and also business activity.
The persistent rise in hard commodity prices is a threat that could weigh on the margins of many manufacturing companies.
Too many potential negatives have come together which could impact markets in the very near future.
Given the near-term challenges and sentiment, we can expect FPI flows to remain subdued in the near term.
On the downside, Nifty has major support at 13,600 and 13,000 which is likely to be the 200-DMA in near future.
2. Expert: Nirali Shah, Head of Equity Research, Samco Securities
Nifty is trading outside its major rising channel, so bulls need to protect the current support as any break below the same can trigger a bearish sentiment throughout the market.
Many big stocks are showing signs of trend continuation on the upside and Bank Nifty is also forming a sort of minor bottom around its short-term averages on a weekly timeframe.
Other leading global indices which were outperforming India are now showing signs of a pullback. We suggest traders maintain a mild bullish to sideways bias on the market and keep tight stop loss just below the market support.
3. Expert: Gaurav Garg, Head of Research at CapitalVia Global Research
Last week, Nifty managed to hold the level of 14,000 and it is an important psychological support level for the coming expiry week.
The levels of 14,150-14,300 are where multiple supports are placed.
The level of 14,500 is an immediate resistance to look for as it carries significant call OI concentration, and if this level is breached on a closing basis, we might see higher levels in Nifty.
Sell on any significant bounce is the strategy traders should consider in this as volatility might go up on monthly expiry as well.
4. Expert: Deepak Jasani, Head of Retail Research, HDFC Securities
Markets in the short term seem to be undecided, although stock-specific moves are more trending.
On one hand, we hope the COVID situation comes under control soon and the FPI money continues to flow in and on the other hand, there is a worry of COVID issue prolonging and it impacting the economy, fiscal situation, corporate earnings and asset quality of lenders.
This has resulted in the indices trading in a band, which itself keeps expanding a little (so far on the lower side).
A resolution of this uncertainty may happen by the end of April or early May when the state election results will be out and most corporate results also will be out.
Retail investors need to curb their greed, ensure that their equity portion in their overall portfolio is within the expected or planned allocation.
For the next few days, they can concentrate on short-term investing in stock-specific stories.
5. Expert: Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
On the daily and weekly charts, the index has formed lower top formation, and the non-directional intraday activity clearly indicates indecisiveness between bulls and bears which will continue in the short run.
The short-term texture of the market is still bearish and likely to continue in the near future.
We are of the view that 14,250/47,450 would be the immediate support level for the bulls. Below it, we can expect one more leg of correction up to 14,150/47,150.
A further downside may also be possible which could drag the index to 14,000-13,900/46,500-46,000.
On the other hand, 14,500/48,300 would be the immediate hurdle for the Nifty and Sensex, above which uptrend structure will continue up to 14,700/49,100.
6. Expert: Vinod Nair, Head of Research at Geojit Financial Services
Despite the weak market trend, vaccination drive and lockdown are invoking hopes of economic recovery in the near future.
The movement will be stock-specific based on Q4 results and dictated by developments on the COVID-19 spread, like falling infection rate.
7. Neeraj Chadawar, Head - Quantitative Equity Research, Axis securities
The impact of COVID-19 and lockdowns on the market will be significant but there are enough structural plays that offer long-term earnings visibility. These should be accumulated during the current fall as they will deliver strong earnings growth and could see higher allocation in the short term.
At the current juncture, the sector rotation theme will likely play out in the near term. IT, telecom, pharma, consumer staples, rural themes will be less impacted and likely to outperform while the impact will be significant in retail, travel, tourism and hotels.
BFSI, discretionary consumption, and autos will bear the brunt of the impact and may underperform in the near term due to the challenging economic environment.
8. Expert: Hemant Kanawala, Head – Equity, Kotak Mahindra Life Insurance Company
The corporate has started announcing results for the March quarter and there are no major disappointments so far. Consensus is expecting a sharp increase in net profit due to the COVID-led disruption in the base quarter.
It will be important to observe comments of banking and domestic consumer-oriented companies about the impact of the recent surge in COVID infection on their business.
Nifty is trading at 21 times 1 year forward EPS, which is close to an all-time high. Hence, the upside from valuation rerating is limited and one needs to watch if there are any earnings downgrade due to the emerging COVID situation.
9. Expert: Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services
Nifty formed a small-bodied candle similar to Doji on the weekly scale with long shadows indicating a tug of war between bull and bears.
Investors would continuously watch out government’s course of action along with progress on the vaccination drive.
Once the availability and the pace of vaccination pick up and daily cases start subsiding, we expect the narrative to gradually shift from COVID-19 and restrictions back to fundamentals.
We would recommend investors take advantage of this volatility as the medium-term thesis remains unchanged.
10. Ajit Mishra, VP Research. Religare Broking
Markets are showing tremendous strength this year so far but it’s too early to presume that we’re out of woods.
We reiterate our view that the prevailing sideways bias in Nifty would end below 14,100 and it may slip towards 13,800.
In the case of a rebound, 14,600 would act as a crucial hurdle. We feel it’s prudent to stay with defensive names and see how the markets pan out in the coming week.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.