Markets may face some hurdles in near term

Indian equity markets snapped its two week loss amidst high volatility. Nifty/Sensex gained +2.8%/+2.7% to close at 14,938/50,405. The broader market outperformed with both Nifty Midcap100 / Smallcap100 gaining +3.5%/+4.0%.

Except PSU Banks (-2.1%), all the other sectors ended in green with Media being the biggest gainer, up +6.6%. It was followed by IT, Auto, Energy and Infra which gained 3-4% while FMCG, Realty and Pharma gained 2-3%. On the other hand, Metals, Private Banks and Financials gained 1-2%. FIIs were net buyers for the week, having bought equities to the tune of Rs 2,200 crore, while DIIs were net sellers to the tune of Rs 2,600 crore.

Global cues turned weak amid meltdown in global markets due to surge in bond yields. Even the remarks from Federal Reserve Chair Jerome Powell disappointed investors by not indicating that the Fed might step up purchases of long-term bonds to hold down longer-term interest rates. Sentiments also got impacted as crude oil prices hit its one year high, after OPEC and its allies agreed to keep production unchanged in April.

On the domestic side, Nifty witnessed increased volatility and closed below 15,000 mark amid pressure from global selloffs and rising yields. PSU Banks and Metals continued to witness selling while Cement stocks witnessed smart rally on the back of increase in prices.

However, the investors cheered the encouraging macro data that came during the week – positive Q3FY21 GDP growth, upbeat Feb’s PMI data, improved Feb’s GST collection data. They also took assurance from the government’s statement that it has enough Covid-19 vaccine doses to cover its population. All this led to positive weekly close for Nifty despite huge volatility.

Primary market remained in limelight with new shares of Heranba Industries listed at Rs 900, a premium of 44% to the IPO price, while the subscription for ongoing IPO of MTAR Technologies crossed 200x on the last day of application.

While the long term structure of the market continues to remain positive, it may face some hurdles in the near term due to concerns over the bond yields, commodity prices and risk of increase in inflation. Investors would also look at global cues for further direction.

Technically, Nifty formed a small Bearish candle on daily scale. Now, it has to cross and hold above 15000 zones to witness an up move towards 15150-15250 zones while on the downside immediate support exists at 14800-14600 levels.

(The writer is Head – Retail Research, B&D, MOFSL)