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Strong earnings could cap the fall triggered by rising COVID cases, experts feel

Nifty has taken strong resistance from 14,700 zone which will be an immediate hurdle for coming week, says Rohit Singre, Senior Technical Analyst at LKP Securities.

April 19, 2021 / 01:29 PM IST
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The market lost over a percent in the week ended April 16 amid mixed cues such as weak macro numbers, better than expected numbers from companies at the start of earning season, and expectations of a normal monsoon. However, investors remained concerned about the rising cases of COVID-19 and resultant restrictions announced by various state governments. Here's what experts are saying:
Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities | The Nifty is still not out of the woods as it continues to trade below the 50 DMA placed at 14,864. If it fails to break past the 15,000 mark then the probability of downside goes up. However, as we expect a strong earnings season going forward it could restrict any major downside that could come due to rise in Covid cases. Since developed markets are showing strength and trading near new highs it is not easy be highly bearish on the market. We could see realignments within many sectors going forward as the result season unfolds.
Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities | The Nifty is still not out of the woods as it continues to trade below the 50 DMA placed at 14,864. If it fails to break past the 15,000 mark then the probability of downside goes up. However, as we expect a strong earnings season going forward it could restrict any major downside that could come due to rise in Covid cases. Since developed markets are showing strength and trading near new highs it is not easy be highly bearish on the market. We could see realignments within many sectors going forward as the result season unfolds.
Ajit Mishra, VP Research, Religare Broking | The coming week is also a holiday-shortened one and we expect volatility to remain high. In absence of any major event, the focus would remain on the earnings as companies like ACC, ICICI Pru, HCL Tech, and M&M Finance will announce their results. Besides, COVID-related updates and cues from the global markets will be on the radar. The recent rise in COVID cases and strict restrictions imposed by the various state governments in India may hamper economic recovery. However, markets are currently taking comfort from upbeat global markets and the progress of the vaccine drive. On the benchmark front, Nifty has been hovering in a range of 14,200-15,000 for the last two months and needs a decisive break on either side for the next directional move else the prevailing consolidation will continue. Amid all, we reiterate our cautious stance and suggest limiting naked leveraged positions.
Ajit Mishra, VP Research, Religare Broking | The coming week is also a holiday-shortened one and we expect volatility to remain high. In absence of any major event, the focus would remain on the earnings as companies like ACC, ICICI Pru, HCL Tech, and M&M Finance will announce their results. Besides, COVID-related updates and cues from the global markets will be on the radar. The recent rise in COVID cases and strict restrictions imposed by the various state governments in India may hamper economic recovery. However, markets are currently taking comfort from upbeat global markets and the progress of the vaccine drive. On the benchmark front, Nifty has been hovering in a range of 14,200-15,000 for the last two months and needs a decisive break on either side for the next directional move else the prevailing consolidation will continue. Amid all, we reiterate our cautious stance and suggest limiting naked leveraged positions.
Nirali Shah, Head - Equity Research, Samco Securities | With major Indian cities undergoing partial lockdowns, markets may continue to remain unstable at least till the uncertainty on the rising cases front subsides. Market participants must not read much into India Inc.’s numbers and should give utmost importance to the management commentary in order to gauge future growth prospects amidst the second wave. Further, any correction may turn out to be a blessing in disguise for the ones who felt left out in the past rally. We advise market participants to keep their shopping cart ready to go in for resilient stocks from the pharma, IT, FMCG sectors in a phased manner.
Nirali Shah, Head - Equity Research, Samco Securities | With major Indian cities undergoing partial lockdowns, markets may continue to remain unstable at least till the uncertainty on the rising cases front subsides. Market participants must not read much into India Inc.’s numbers and should give utmost importance to the management commentary in order to gauge future growth prospects amidst the second wave. Further, any correction may turn out to be a blessing in disguise for the ones who felt left out in the past rally. We advise market participants to keep their shopping cart ready to go in for resilient stocks from the pharma, IT, FMCG sectors in a phased manner.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services | Indian markets are likely to be highly volatile and would be an interplay of resurgence in COVID-19 cases and the pace of vaccination. As availability of more vaccines and the pace of vaccination picks-up, we expect the narrative to gradually shift from Covid-19 and restrictions back to growth/cyclical recovery and rebound corporate earnings. We believe this correction is a buying opportunity and it doesn’t change the medium term thesis. Valuations at 20x FY22 Nifty EPS, are not exorbitantly expensive either given the benign equity-bond yields metric and turn in earnings cycle after a decade-long tepid earnings delivery.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services | Indian markets are likely to be highly volatile and would be an interplay of resurgence in COVID-19 cases and the pace of vaccination. As availability of more vaccines and the pace of vaccination picks-up, we expect the narrative to gradually shift from Covid-19 and restrictions back to growth/cyclical recovery and rebound corporate earnings. We believe this correction is a buying opportunity and it doesn’t change the medium term thesis. Valuations at 20x FY22 Nifty EPS, are not exorbitantly expensive either given the benign equity-bond yields metric and turn in earnings cycle after a decade-long tepid earnings delivery.
Rohit Singre, Senior Technical Analyst at LKP Securities | Index closed a week at 14600 zone with loss of 1.50% on weekly basis and formed hammer sort of candle pattern on weekly chart. Again index has taken strong resistance from 14700 zone which will be an immediate hurdle for coming week as well followed by 14800 zone, supports are still placed at 14500-14400 zone if managed to hold above said levels we may see positive move in coming sessions.
Rohit Singre, Senior Technical Analyst at LKP Securities | Index closed a week at 14600 zone with loss of 1.50% on weekly basis and formed hammer sort of candle pattern on weekly chart. Again index has taken strong resistance from 14700 zone which will be an immediate hurdle for coming week as well followed by 14800 zone, supports are still placed at 14500-14400 zone if managed to hold above said levels we may see positive move in coming sessions.
Rakesh Patil
first published: Apr 19, 2021 08:40 am

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