Below is the Daily Market Commentary 21 May 2021 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd
Equity market snapped its two-day fall and rallied sharply led by Banking and Financials. Nifty/Sensex surged 269/976 points (+1.8%/+2.0%) to close at 15,175/50,540 respectively. The broader market too gained but underperformed with Nifty Midcap 100/Nifty Smallcap 100 up +0.8%/+0.6% respectively. All the sectors ended in green with Banks and Financials entirely leading the rally – up +3.8%/+3.2%. Realty gained +1.2% while all the other sectors were up less than +1% each.
Global cues were positive as investors cheered data showing a continued decline in initial jobless claims, thus raising hopes of economic revival. Even Eurozone’s IHS Markit composite PMI climbed to a 39-month high in May, adding to positivity. Domestically, Nifty after its back-to back two day fall, rallied smartly led by positive global cues and strong results posted by SBI. Further the new daily covid cases which remained below the 3L mark for the fifth day in a row, kept the sentiments buoyant as it raised hopes of lifting of lockdown soon. SBI was the top Nifty50 gainer, up 5% posit its Q4 result beats street estimates. HDFC Bank, IndusInd Bank, ICICI Bank, Axis Bank and HDFC were among the other top performers. On the other hand, Grasim was the top laggard, down half a per cent. Power Grid, Indian Oil, Eicher Motors and Dr Reddy's were among the other losers.
Technically, Nifty formed a strong Bullish candle on daily and weekly scale while has been forming higher top - higher bottom from the last three weeks. Now, it has to hold above 15050 zones to witness an up move towards 15300 then life time high of 15431 marks while on the downside support exists at 15000 and 14900 zones. India VIX fell down by 2.90% from 19.65 to 19.08 levels. India VIX needs to hold below 20 zones to extend the bullish market momentum towards new life time territory.
Reopening of economies in western countries and encouraging economic data points recently raised hopes for quick global economic recovery. Even domestically, with fresh cases subsiding continuously, investors are positive on soon uplifting of the restrictions by several states. Thus the overall structure of the market remains positive from the long term perspective. However, daily deaths record continue to be high and worry the investors. Even the rising inflation worry continues to loom. So, global economic revival, the risk of pickup in inflation and development on the Covid-19 front domestically would decide the market direction going ahead. Investors would also watch out for more clues on the economic recovery front from the US PMI data and existing home sales data that would be released later today (Friday).
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