Dalal Street Corner: Benchmarks close highly charged week with 3% gains; what should investors do on Monday?

Strong show by the Indian market on the last trading day of a highly charged week helped benchmark indices settle with nearly 3% gains on Friday. Broader Nifty50 added 3.1% and the 30-share Sensex closed higher by 2.9% for the week ended May 20,2022. The weekly gains were largely due to the performance of the domestic equity market on Friday, which saw headline indices closing the day with around 3% gains each. On Friday, benchmarks ended at16,266.15 and 54,326.39 respectively.  

The rally on Friday was largely led by metal, pharma and Realty stocks as Indian markets took cues from the strength in the Asian stock markets. 

Metal, Auto and Capital Goods led from the front as Nifty Metal gained over 7%, Nifty Auto nearly 5% and BSE Capital Good over 5% in the week ending on May 20, 2022.  

This week, the market closed in the green thrice and slipped in the red territory twice as Indian market, largely influenced by global markets, trade with extreme volatility amid global inflation fears.  

We have collated views of market experts who spoke on the current market trend and hint at how the market is likely to perform going forward.  

Vinod Nair, Head of Research at Geojit Financial Services. 

The market displayed a confident yet calm rally throughout the day, supported by fortified global markets, especially the Asian market. The Chinese Central bank cut a key interest rate to support growth, injecting optimism into emerging markets.  

With concerns over an economic slowdown and rate hikes across the globe, investors will continue to invest with caution. Value stocks should do well during this consolidation period. 

S Ranganathan, Head of Research at LKP securities.  

As Equity Investors brace for higher volatility on the back of the flip-flop in benchmark indices, the fact that markets are never priced to ground realities, the art of capitalising on the disconnect between earnings and stock prices creates pockets of opportunities. The day witnessed keen investor interest in Auto, Pharma, Metal and Defence stocks as Indices vaulted 3% with all sectoral indices ending firmly in the green" 

Rupak De, Senior Technical Analyst at LKP Securities  

Nifty witnessed a strong recovery as the benchmark index ended about 3% higher. On the daily chart, the index has formed a double bottom. Immediate resistance is visible at 16400; a decisive breakout above 16400 may induce a rally towards 16600-16700. On the lower end, support is visible at 16000.  

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services 

The excessive volatility in the market is broadly due to two reasons. One, the market has discounted severe monetary tightening by the Fed which is likely to take the Fed funds rate to around 3% in 2023. Two, the market has not fully discounted the probability of the US economy slipping into recession in 2023. Till there is clarity on the second issue, the 'risk-off, risk-on mode' in the market is likely to continue in the near term. It may take a few weeks for the markets to stabilize. 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)