Taking Stock: Mild recovery on Street! Sensex closes a shade below 32K; what should investors do?

Indian markets witnessed a recovery on D-Street on Friday ahead of the 3rd press conference of the Finance Minister Nirmala Sitharaman. The S&P BSE Sensex closed just a shade below 32,000 while the Nifty50 held on to 9,100 levels.

Let’s look at the final tally on D-Street – the S&P BSE Sensex 25 points lower at 31,097 while the Nifty50 closed 5.9 points lower at 9,136.

Sectorally, profit-taking was seen in realty, banks, auto, and financial stocks while the value buying was seen in sectors like energy, metals, and telecom stocks.

Sensex slips 1.7 percent, Nifty50 dropped 1.3 percent & Nifty Bank was down 2.7 percent for the week ended May 15.

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Broader markets underperformed as the S&P BSE Midcap index closed 0.31 percent, and the S&P BSE Smallcap index was down 0.16 percent.

Top Nifty losers include names like UPL, Axis Bank, Bharti Infratel, and M&M.

Top Nifty gainers include names like Asian Paints, Bharti Airtel, BPCL, and Vedanta.

What should investors do?

Buying seen in the last one-hour suggest that investors bought the dip and bulls failed to push the index back in the green. The market exhibited volatility before ending flat today following Tranche 2 of the stimulus package by the government.

“The markets are heading in the right direction. The package did nothing to enthuse the markets. Without this boost, markets were left to worry about the rising virus cases and lacklustre earnings commentary,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“Concerns are emerging on the make-up of Lockdown 4.0. It is this uncertainty that is weighing on investor’s minds. The 3rd press conference of the FM today and the new norms of Lockdown 4.0, along with global developments will determine market moves for next week,” he said.

Technically, Nifty50 slipped below its crucial short term moving average which suggest that pressure could remain. But, buying seen in the last one hour of the trade suggest that the market could move towards 9300 as well.

“Optimism was evident in the market since the morning trades and the Nifty bounced back from the lows to close in a recovery pattern towards the end of the day,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities told Moneycontrol.

“Traders lapped up stocks on hopes of a bold announcement by the FM on the stimulus package front. Technically, the double bottom formation has formed in oversold markets and at least we can expect the Nifty to move closer to 9300 levels. However, it is mandatory to keep a stop loss at 9040,” he said.

Stocks & Sectors:

Sectorally, the S&P BSE Telecom index rose 1.8 percent, followed by the S&P BSE Metal index which rose 1.6 percent, and the S&P BSE Energy index was up 1.3 percent.

On the losing front, the S&P BSE Realty index was down 1.4 percent, followed by the S&P BSE Bankex was down 1.09 percent, and the S&P BSE Auto index fell 1.01 percent.

Volume spike of more than 100% was seen in HPCL, YES Bank, InterGlobe Aviation, Biocon, BPCL, BEL, and SAIL.

Long Buildup was seen in stocks like Escorts, YES Bank, RIL, Motherson Sumi, and Muthoot Finance.

Short Buildup was seen in stocks like Cummins India, Equitas, UBL, Tata Consumer, and Ujjivan Finance.

More than 40 stocks on the BSE hit a fresh 52-week high include name like Ajanta Pharma, Alembic Pharma, Aarti Drugs, Ruchi Soya, and India Cements.

Stocks in news:

Aviation stocks gain on hopes of relief package; Indigo, SpiceJet up 1-5%

HAL gains 6% on likely order for India’s fighter jets

India Cements surges as RK Damani raises stake to 20% in March Qtr

Unichem Laboratories’ share price jumped almost 4 percent after the company received the Establishment Inspection Report (EIR) from the United States Food and Drug Administration (USFDA) on May 13 for its facility in Maharashtra’s Roha.

Biocon share price fell 2 percent on May 15 after the company had reported its fourth-quarter numbers on May 14.

Technical View:

Nifty formed a ‘Hammer’ kind of formation on the daily charts

The index closed below 5-Days EMA placed at 9205

Nifty formed a negative candle pattern on the weekly chart with upper shadow.

This indicates sell on the rise in the market in the last few sessions, suggest experts.

“We observe overlapping negative candles in the last two weeks, which signals choppy movement in the market with weak bias,” Nagaraj Shetti, Technical Research Analyst, HDFC Securities said.

“The near term trend of Nifty is range-bound with a weak bias. Having placed at the immediate support of 9150, there is a possibility of minor upside bounce in the early part of next week up to 9350 levels. But, one may use this upside bounce as a sell on the rise opportunity,” he said.

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