Volatility may continue as coronavirus remains a dominant factor

 

The Indian market is expected to witness bouts of volatility on March 5, reacting to the reports regarding coronavirus.

As per media reports, the total number of known coronavirus cases in India have risen to 29, including 16 Italian tourists who had tested positive for the disease as well as an employee of a digital payments company who had travelled to Italy.

Even as the governments and central banks of many countries vowed to take steps to mitigate the impact of coronavirus on the global economy, rising worries of coronavirus are acting as a dominant factor for the high volatility in the equity markets.

However, positive global sentiment is expected to underpin the domestic market.

Asian shares jumped higher and are looking to rally for a fourth straight session on March 5, following sharp gains in Wall Street, with both the Dow and the S&P 500 surging more than 4 percent.

Trends on SGX Nifty indicate a muted opening for the index in India. The Nifty futures were trading flat at 11,254 on the Singaporean Exchange around 06:50 hours IST.

Indian market witnessed strong volatility on March 4 as well with Sensex swinging 946 points in intraday trade, and eventually settling in the negative territory.

Sensex ended 214 points, or 0.55 percent, lower at 38,409.48, while Nifty shut shop at 11,251, with a loss of 52 points, or 0.46 percent.

Midcaps and smallcaps suffered more as their sectoral indices on BSE plunged 2.53 percent and 2.83 percent, respectively.

On the sectoral front, BSE Bankex, with a loss of 1.72 percent, emerged as the top loser, followed by finance, basic materials, industrials and realty, each falling over 1 percent.

On the contrary, BSE Healthcare, Information Technology and Teck indices bucked the trend and rose over a percent each.

Meanwhile, the Indian rupee swung wildly before closing flat at 73.19 against the US currency on March 4.

Foreign institutional investors (FIIs) sold shares worth Rs 878.38 crore, while domestic institutional investors (DIIs) bought shares worth Rs 764.13 crore in the Indian equity market on March 4, provisional data available on the NSE showed.

Technical view:

Nifty formed a bearish candle on the daily charts.

Mounting coronavirus cases, foreign institutional investors’ (FIIs) exodus, RBI playing the waiting game to provide stimulus has prompted investors to exit the market.

Experts expect the volatility to continue in coming sessions and the strength is possible only if the index closes decisively above 11,433 levels, the upper end of consolidation range.

According to Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, near-term strength in the index can be expected on a close above 11,433 levels and in that scenario, it can extend to 11,536.

On the downside, the index needs to protect the ascending trendline, which is in progress from the October 2018 lows of 10,004, whose support for next trading session is placed around 11,080 levels, he said.

Three levels to watch on Thursday would be 11,083, 11,355, 11,433.

Max Call OI: 11,800, 11,700

Max Put OI: 11,000, 11,300

Stocks in the news:

HDFC: Reduced its retail prime lending rate (RPLR) on housing loans by 5 basis points.

Allcargo Logistics: The company got SEBI approval to buy 3.17 crore shares in Gati via open offer.

Bank of Baroda: Moody’s cut Bank of Baroda’s baseline credit assessment rating to Ba3 against Ba2.

Maruti Suzuki: The company partnered with HDB Financial Services to facilitate car loans for the customer.

HDFC Bank: The lender reconstituted the search panel to identify the successor to the MD.

Technical Recommendations:

We spoke to Bonanza Portfolio and here’s what they have to recommend:

Apollo Hospitals Enterprise | Buy | LTP: Rs 1,753.05 | Target: Rs 1,850 | Stop loss: Rs 1,700 | Upside: 5.53%

Alembic Pharmaceuticals | Buy | LTP: Rs 643.60 | Target: Rs 730 | Stop loss: Rs 600 | Upside: 13.42%

HDFC Bank | Sell | LTP: Rs 1,149.15 | Target: Rs 1,080 | Stop loss: Rs 1,190 | Downside: 6%

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.

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