Dalal Street Corner: Market participants must remain cautious till Nifty sees reversal; stock selection key when exchanges reopen on Tuesday

The domestic stock markets on Monday snapped a six-day losing streak and closed in the green amid neutral global cues. Both the benchmark indices – Sensex and Nifty50 gained almost 0.4 per cent, while the broader markets – mid-cap and small-cap surged over 1 per cent at the market close.  

As many as 33 stocks advanced, 16 declined & one remained unchanged on Nifty50 at the close. Eicher Motors surged most by nearly 8 per cent, followed by Apollo Hospitals up over 4 per cent.  

On the contrary, cement heavyweights such as UltraTech Cement and Shree Cement ended with 3 per cent and 2.5 per cent lower reacting to the announcement made by Adani Group regarding acquisition of controlling stakes in Ambuja Cements and ACC from Switzerland-based company Holcim. 

Sectorally, Nifty PSU Bank surged almost 3 per cent, followed by Nifty Realty up over 2.5 per cent and Nifty Auto up over 2 per cent. While Nifty Bank, Financials, and Metal each surged between 0.5 and 1.5 per cent at the close. All sectoral indices closed higher expect for FMCG, IT, and Pharma. 

Diagnostic and pathology companies’ shares witnessed profit-taking ahead of their Q4 earnings on the back of high competitive intensity, LKP Securities said in a market comment. 

In the primary market, India’s biggest initial public offer (IPO) of Life Insurance Corporation of India (LIC) is expected to make a flat debut on exchanges on Tuesday, the market analyst expects. Besides, Paradeep Phosphates public offer to open on Tuesday, and shall be active till May 19, 2022. 

We have collated views from different experts as to what investors should do when trading resumes: 

Expert: Vinod Nair, Head of Research at Geojit Financial Services. 

Continued selling by FIIs (Foreign Institutional Investors) as they chase high yield US bonds restricts the Indian market to hold on to its pull-back rally, despite interest from the domestic investors.  

Weakness in global equities along with the unfavourable global cues led to heavy selling towards the closing hours, as the investors lacked the confidence to take forward their positions. The investors are currently on a risk deleveraging phase, hunting for safe-haven investments. 

Expert: S Ranganathan, Head of Research at LKP securities.  

Autos and Banks helped the benchmark Indices stay in the green on Monday as rising inflation and its impact on discretionary spending kept investors worried. The broader markets witnessed keen interest in companies likely to post good numbers during the first quarter of the current fiscal.  

Expert: Rupak De, Senior Technical Analyst at LKP Securities.  

Nifty continues to consolidate in the narrow range as the benchmark index has failed to give any directional movement. Sideways pattern may continue as long as Nifty stays within a tight band of 15800 and 16000 on a closing basis.  

A decisive breakout on either side may induce a decent move in the direction of the breakout. 

Expert: Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas 

The Nifty opened on a positive note & attempted to build upon the early gains. On the higher side, however, it stumbled near the 16000 mark. Thus, the index oscillated throughout the day & ultimately formed a Doji pattern on the daily chart and shows indecision in the participants’ minds. 

The index is expected to stay under pressure as long as it trades below 16000. In that case, it can test the March low of 15671. On the flip side, if the bulls manage to take out the 16000 mark on a closing basis then the Nifty can take a leap towards 16200-16250. 

Expert: Ajit Mishra, VP - Research, Religare Broking Ltd 

Since markets are closely following global cues, the rebound in the US market is giving hope for some respite on the domestic front as well.  

However, we recommend participants continue with a cautious stance until we see some sign of reversal in the Nifty index. Meanwhile, sectors are offering trading opportunities on both sides so the focus should be more on stock selection and risk management.