After
so many ups & down since 13 march 2020 bulls bring back nifty to 10000 mark
& hovered around 10075. Nifty took almost 46 session to reclaim 10,000
mark. The Sensex breached the 34000-mark and was trading over 300 points higher
at 34100 levels. Nifty made a low of 7511 on 24 march 2020. This period saw
strong volatility as the Covid-19 pandemic triggered a major disruption in
businesses and normal life. Besides, trade tensions between the US and China,
sustained selling by foreign institutional investors (FII) and volatility in
crude oil prices added to the woes. Most index components contributed to
the ongoing rally. However, State Bank of India (SBI) stood out as a
non-performer. Shares of the public sector lender are still down nearly 5 % from
its March 24 levels. All eyes are on SBI’s March quarter numbers now.
The bank is projected to post 16% growth in net interest income and 34% expansion
in pre-provision operating profit for the quarter. The results will be out on
Friday, June 5.
In its ongoing momentum, the market has ignored high-frequency indicators signaling acute pain ahead for the economy. India’s economic growth slowed to 3.1% during the January-March period and to an 11-year low of 4.2% for the full financial year of 2019-20 amid a drop in consumption and investment. In terms of valuation, Nifty is looking undervalued compared with its long-term moving average. On Wednesday, the nifty traded at a P/E value of 23.31 times compared with a five-year average of 24.72. We expect market would remain volatile. The index formed a bullish candle on the daily scale and needs to hold above 10,000 to extend gains towards 10500, and then 10700 -11000 zone. Overall setup and momentum is positive and a hold of recent zones could extend rally, while support exists at 9800 and then 9500 levels. It has been making higher top and higher bottom formation and supports are gradually shifting higher with medium term support at 9000. In the near term, we do have uncertainties. We’ll have to see how the coronavirus crisis pans out. If there is a second wave, how far the first wave goes; all of those uncertainties remain. But it is suffice to say that there is a collective effort among countries globally to ensure that the economies will pick up and things come back on track. We should be betting in favour of these measures playing out and being successful rather than against them. It has the might of government behind it. Eventually, we will tide over this crisis.
In its ongoing momentum, the market has ignored high-frequency indicators signaling acute pain ahead for the economy. India’s economic growth slowed to 3.1% during the January-March period and to an 11-year low of 4.2% for the full financial year of 2019-20 amid a drop in consumption and investment. In terms of valuation, Nifty is looking undervalued compared with its long-term moving average. On Wednesday, the nifty traded at a P/E value of 23.31 times compared with a five-year average of 24.72. We expect market would remain volatile. The index formed a bullish candle on the daily scale and needs to hold above 10,000 to extend gains towards 10500, and then 10700 -11000 zone. Overall setup and momentum is positive and a hold of recent zones could extend rally, while support exists at 9800 and then 9500 levels. It has been making higher top and higher bottom formation and supports are gradually shifting higher with medium term support at 9000. In the near term, we do have uncertainties. We’ll have to see how the coronavirus crisis pans out. If there is a second wave, how far the first wave goes; all of those uncertainties remain. But it is suffice to say that there is a collective effort among countries globally to ensure that the economies will pick up and things come back on track. We should be betting in favour of these measures playing out and being successful rather than against them. It has the might of government behind it. Eventually, we will tide over this crisis.
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Resistance: 10500, 11000
Support: 9800, 9000
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