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Gaurav Bora- Market Expert
While the week ended March 12 was volatile for the market, but bulls managed to keep their hold in the past week that gives initial sign of peace of mind for bulls. Now markets are over sold and showing early sign of recovery, Small and Midcap stocks are showing outperformance against large cap this one of the good sign for market. I have suggested in Feb only that we may see pressure in the market till March 1st week and then we may see stability in market from 2nd week of March, in this we have seen more than 1000 points recovery in Nifty. I am expecting another 2000-2500 points rally till 2nd Week of May.
We may see positive development on geopolitical tension between Ukraine and Russia. Russian President Vladimir Putin said on Friday that there are certain positive shifts in talks with Ukraine. Commodities have been on a rise for the last few days as Russia-Ukraine fighting fuelled concerns that supply from Russia may be impacted. While resolution of the dispute between Russia-Ukraine may cool off commodity prices which may release tension of equity markets.
Normally during an economic recovery inflation increases, gross domestic product (GDP) grows, incomes rise, and unemployment falls as the economy rebounds. Typically, in this phase higher inflation is caused by strong economic growth, so we may see rate hikes by various central banks globally. Interest rates usually fall early in a recession, then later rise as the economy recovers. This means that the adjustable rate for a loan taken out during a recession is nearly certain to rise, so this doesn’t impact much to economy.
With the reduced geopolitical tensions, we may see cool off in USDINR. In coming week after Fed Interest meeting, we may see further reduction in USDINR. FIIs selling is continued in equity market but it is not only in India but it is globally, as soon as we get clarity on macro front then again we may see FIIs buying again. But very soon we may see good FIIs money will get diverted from Europe and Russia to India. In Indian market we are witnessing handsome DIIs buying and again as soon as LIC IPO announcement happens big DIIs buying can be witnessed.
Key Factors:
- Reduction in geopolitical tension between Russia & Ukraine
- Cookoff in Commodity prices.
- Increase Interest Rate
- Inflation
- USDINR
- FIIs Selling
Technical View:
Nifty formed bullish candle formation on the daily as well as weekly charts with closing above 16,600 mark, as soon as Nifty sustains above 17,000 level sharp bounce can be seen. After 2 years (March 2020, Covid times) Nifty is in oversold zone after a big downside trend and showing reversal. From 17 Jan 2022 we have seen 2680 points down side movement in Nifty, in reversal within 2 months till 13 May 2022 expecting 4500 points rebound out of which 1000 points recovery already seen. After a big fall as soon as Nifty succeed to close above 200 DMA 16,960, which may show new high. While important support is placed at 15,600 to 15,800 and resistance is placed at 17,000 to 17,200 levels. The volatility index India VIX cooled off from 31.98 to 25.34 levels, cool off in volatility suggests relief and it needs to sustain at lower levels for a bullish market.
