Markets likely to remain in a consolidative mode

Indian equity markets ended the truncated week on a strong note. Nifty/Sensex gained +2.5%/+2.1% to close at 14,867/50,030. The broader market outperformed Nifty with both Nifty Midcap100 / Smallcap100 gaining +3.9%/+3.8%. All the sectors ended in green with Metals clearly outstanding – gained +8.7%, followed by PSU Banks and Pharma – up more than +4%. All others gained 1-3%. FIIs were marginal net sellers for the week, having sold equities to the tune of Rs 767 crore, while DIIs were net buyers to the tune of Rs 4,000 crore.

Global cues were positive led by US President Joe Biden’s announcement of a multi-trillion-dollar infrastructure investment plan. Besides, investors also focused on prospects of faster vaccine progress on the US economy. Market ignored concerns about a hedge fund default that shook global banking stocks.

On the domestic side, Nifty ended FY21 with strong gains while began the new fiscal year on a positive note. Overall for FY21 Nifty gained +71%, while Nifty Midcap / Smallcap sharply outperformed with gains of +102% /126% respectively. On the first session of FY22, Nifty gained +1.2% led by positive global cues and record GST collection for the month of March which boosted the market sentiments. Rising global prices and increased domestic, as well as global demand, boosted metal stocks. PSU Banks gained on the back of capital infusion from the government.

Technically, Nifty has been forming higher lows from last four trading sessions and managed to cross a recent swing high which is boding well for the bulls. It formed a Bullish candle with long lower shadow indicating buying was seen on declines. Now, it has to hold above 14800 to witness an up move towards 15000-15100 while on the downside, support exists at 14700-14600 levels.

Going ahead, Indian markets are likely to track global cues after the recent announcement of the infra investment plan by the US president. Further, investors would now focus on upcoming quarterly results which would kick start from mid-April.

Domestically, concerns over the fast-spreading 2nd wave of Covid in India continues to remain and the fear of possible lockdowns prevail. Overall, markets are likely to remain in a consolidative mode for some time awaiting for fresh positive triggers. Next week, investors would react to OPEC meeting outcome which met on April 1, amid concerns about extended lockdowns in Europe and volatile oil prices throughout March.

Market would also keep an eye on PMI data of US, China and Europe next week. In the given scenario, investors would do well by gradually accumulating good quality companies on any declines in the market.

(The writer is Head – Retail Research, MOFSL)