Indian equity markets snapped its three-week losses and ended with strong gains despite sharp sell-off on the last day of the week. Nifty and Sensex gained 2.0% and 1.9% respectively to close at 14,631 and 48,782 respectively. The broader market outperformed with both Nifty Midcap100 and Smallcap100 up 3.0% and 3.8% respectively.
Except for FMCG that fell by 0.3%, all the other sectors ended in green with Metals being the biggest outperformer – up 9%. Robust global demand and pricing lifted metal stocks to yet another peak. Banks and Infra gained more than 3% while financials, realty, energy and media gained 2-3%.
FIIs continued to be net sellers for the sixth straight week, having sold equities to the tune of Rs 4,500 crore, while DIIs were net buyers to the tune of Rs 3,400 crore.
Global cues were positive as U.S. Fed pledged to maintain easy monetary policy despite stronger assessment of the economy. It held interest rates and its bond-buying program steady to aid economic recovery. Further recent strong economic data-points have boosted confidence on economic recovery front.
On the domestic side, Nifty was a gainer for the large part of the week, led by good results and strong management commentary, which boosted the overall market sentiments. Further, given the continuous record spike in Covid cases daily, many countries came forward to extend their help towards India in fighting the pandemic.
Thus, with various steps undertaken by the government to curb the spike and with vaccination opening for all from May 1, there was hope that the current Covid situation may come under control by Mid-May.
However sharp sell-off was witnessed on the last day of the week, amidst mixed results being indicated by the exit polls of state elections. Even shortage of vaccines dented market sentiments. Fear of further localized lockdown across various states and thus its impact on the overall economic recovery led to profit booking.
Going forward, after having moved 6% from its recent lows, markets are likely to be range bound as the fear of the continuous rise in Covid cases and extended lockdowns in various states, are likely to cap the upside. We expect Nifty to trade in the range of 14,200-15,000 zone.
So far, a strong quarterly earnings season has been supportive to the market but the poor progress on the vaccination front is denting the sentiments. Next week, investors would keenly track the state elections outcome and Auto monthly sales data which would keep the market on the edge, while on the global front, key macro-economic data like US Non-Payroll Farms data and BoE monetary policy would be kept an eye on.
(The writer is Head- Retail Research, MOFSL)