Stock Markets on Monday: No clear cues on direction despite a two-week consolidation; wait for decisive breakout from 6,800-17,300 zone in Nifty, says expert

Stock Markets on Monday: Indian Stock markets ended the week in red. The BSE Sensex fell over 460 points or 0.8 per cent to settle at 57060.87 while the Nifty50 ended at 17102.55, falling down by 142 points or 0.8 per cent. Bank Nifty fell nearly 1 per cent or by 334 points to close at 36088.15.

The correction was witnessed even in the broader markets as Nifty Midcap 100 declined by over 250 points to end the last weekly trading session at 29880.35.

The Foreign Institutional Investors (FIIs) were net sellers on Friday and sold Indian equities worth Rs 3648 cr in the cash market. Meanwhile, the Domestic Institutional Investors (DIIs) bought shares worth Rs 3490.  

Market Expert Sandeep Jain called the Friday session strange adding that the markets opened strongly amid positive global cues. The declines began in the second session and one of the reasons for it could be the new margin rules that come into effect from Monday. He said that people must brace up for it as markets might see making adjustments to the new rules over the next 3-4 trading sessions.

He said that he does not see a bull run over the next week.

Not everything was negative as Volatility Index or VIX came down below 20, which is a good sign, the Tradeswift Director said while speaking to Zee Business’ Swati Raina in the popular TV show BazaarAgleHafte (#BazaarAgleHafte).

Markets tightly held consolidation range for the second successive week and finally ended with a cut of nearly half a percent. Nervousness in global markets combined with a mixed start of Q4 earnings on the domestic front kept the volatility high throughout the week, Ajit Mishra, Vice President Research at Religare Broking said.

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“Finally, the benchmark indices, Sensex and Nifty, settled at 57,060.87 and 17,102.55 respectively. On the sector front, most of the indices ended as laggards wherein PSU bank, oil & gas, and metals were the top losers. On the flip side, auto and FMCG ended in the green. Meanwhile, the broader indices underperformed and lost in the range of 1.4%-2.7,” Mishra said.

The coming week is a holiday-shortened one and it’s going to be critical as some of the important events and data are lined up. Participants will first react to the auto sales numbers. On the macro front, markets will be eyeing Manufacturing PMI and Services PMI data on May 2 and May 5 respectively.

LIC IPO: The much-awaited IPO of insurance behemoth, LIC, is opening for subscription on May 4. On the global front, the US Fed meeting outcome will be in focus. Markets are discounting a 50 bps rate hike this time and the focus would be on their commentary on the quantum of rate hikes ahead.       

Nifty Trading Strategy: “It’s almost two weeks under consolidation but markets are not offering any cue over the next directional move. We suggest waiting for a decisive breakout from the 16,800-17,300 zone in Nifty. Meanwhile, participants should limit positions and focus on identifying the sectors/themes which are showing resilience amid the consolidation bias. Investors, on the other hand, shouldn’t look much into the short term fluctuations and keep a close watch on the earnings for cues.”.