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Below is the Views On Weekly note by Ajit Mishra, VP - Research, Religare Broking
Markets remained range-bound for most of the week but a recovery in the select index majors helped the benchmark to end higher. Initially, the buoyancy in the global markets aided a firm start but feeble local cues viz. rising coronavirus cases and extended lockdown capped upside. Sentiment improved on the back of news related to additional stimulus package which the government could announce anytime soon. Besides, the RBI’s second leg of measures to boost the liquidity and ensure financial stability triggered a strong surge on Friday. In between, the earnings announcement from the IT majors, Wipro and TCS, failed to trigger any major directional move in the IT pack. Consequently, the Nifty ended the week higher by 1.7% and broader markets outperformed with midcap and smallcap ended higher by 4.9% and 5.4% respectively. Amongst the sectors, all the indices, barring IT, ended with healthy gains wherein banking, capital goods, metal and auto were the top gainers.
Going ahead, earnings will remain in focus as HDFC Bank will come out with its Q4FY20 results over the weekend. Another IT major, Infosys ltd, will announce its results on April 20. We feel the management commentary will be crucial more than the results as it will set the tone for coming quarters amid the COVID-19 crisis.
The recent buoyancy in the banking space is certainly positive and that could help the Nifty to test 9450 soon. Surprisingly, other cyclical too are showing resilience. However, a lot depends upon the earnings now and how the coronavirus situation pans out ahead. In the case of decline, the 9000-8700 zone would act as support. We suggest maintaining a positive yet cautious approach and focusing more on stock selection.
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