Nifty likely to remain volatile, global cues to dictate the trend

 

The Indian market is expected to witness volatility on March 4, in sync with the trend seen in major global markets as the US Fed rolled out policy initiatives to curtail the economic impact of coronavirus.

Wall Street tumbled and Asian shares wobbled as an emergency rate cut from the US Federal Reserve failed to soothe investor fears over the coronavirus’ widening fallout.

The US Federal Reserve on March 3 cut interest rates by half a percentage point to a target range of 1.00 percent to 1.25 percent in an emergency move to mitigate the impact of the coronavirus on the world’s largest economy.

Besides, the Group of Seven nations (G7) failed to meet the expectations of the market as they vowed to use all appropriate policy tools to prevent the coronavirus crisis from damaging the global economy but did not announce any clear policy measures.

Trends on SGX Nifty indicate a negative opening for the index in India. The Nifty futures were trading with a loss of 5 points, or 0.04 percent, at 11,265 on the Singaporean Exchange around 07:15 hours IST.

Indian market snapped a 7-day losing streak on March 3 tracking gains in global markets after comments by central bank officials over possible policy initiatives to counter the economic slowdown in their respective countries fuelled risk-on sentiment.

The Reserve Bank of India (RBI) said it is “monitoring global and domestic developments closely and continuously”. Soothing concerns, it promised to take appropriate action to ensure that financial markets run smoothly.

The BSE Sensex rose 480 points to 38,623.70 while the Nifty50 jumped 171 points to close at 11,303.30.

Sectorally, action was seen in metals, power, healthcare, oil & gas, and energy indices. Broader markets outperformed as the S&P BSE Midcap index was up 1.79 percent while the S&P BSE Smallcap index gained 1.25 percent.

Meanwhile, the Indian rupee fell for the third consecutive session on March 3. The Indian currency slumped 47 paise to 73.23 against the US dollar, as per the provisional data.

Foreign institutional investors (FIIs) sold shares worth Rs 2,415.8 crore, while domestic institutional investors (DIIs) bought shares of worth Rs 3,135.24 crore in the Indian equity market on March 3, provisional data available on the NSE showed.

Technical view:

Nifty formed a bullish candle that resembled a Harami bullish reversal pattern on daily charts in the last session.

The pattern points to a possible decent pull-back rally in the coming session but the index needs to hold the momentum for some more days, then only there could be confirmation of a reversal, experts say.

Moreover, twin momentum oscillators also generated a buy signal, which usually acts as a leading indicator of an impending upmove.

A sustainable move above 11,433 may result in a pull-back move towards 11,550–11,600 levels. On the flip side, major support is placed at 11,150 and then 11,030 zones, said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.

India VIX fell by 2.62 percent to 24.54 levels.

Three levels to watch out for: 11,152, 11,433, 11536

Max Call OI: 11800, 11700

Max Put OI: 11000, 11300

Stocks in the news:

Infosys: The company got an order from K+S AG to set up hybrid cloud data centres.

Kolte Patil: NCLT approved scheme of the merger by absorption of Bellflower Properties with the company.

Max Financial: The company will issue 7.54 crore shares to Mitsui Sumitomo at Rs 565.11 per share.

Technical Recommendations:

We spoke to SMC Global Securities and here’s what they have to recommend:

PI Industries | Buy | LTP: Rs 1,570 | Target: Rs 1,745 | Stop loss: Rs 1,400 | Upside: 11.15%

Dabur India | Buy | LTP: Rs 507.30 | Target: Rs 540 | Stop loss: Rs 475 | Upside: 6.45%

Sanofi India | Buy | LTP: Rs 7,385 | Target: 8,200 | Stop loss: Rs 6,800 | Upside: 11%

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