Below is the Views On Weekly note by Mr. Ajit Mishra, VP - Research, Religare Broking Ltd
Markets started the week on a promising note however mixed cues capped movement as the sessions progressed. In between, volatility remained high as domestic markets continued to dance on the tune of global peers and increasing COVID cases worldwide kept markets on edge. Nonetheless, investors’ sentiments were boosted on news of easing of geopolitical tension between India and China as well as encouraging PM’s speech at the India global week summit. The benchmark indices, Sensex and Nifty ended with gains of 1.6% and 1.5%, respectively. On the sector front, metals, banks and IT were the leaders while power, consumer durables and telecom traded lacklustre. Besides, noticeable interest was witnessed on the broader front too.
On the result front, we had IT major, TCS, which reported subdued Q1FY21 numbers largely impacted by COVID led lockdown. Further, management was confident as they stated that the effect of the pandemic on the business is bottomed out and the company would start seeing recovery from Q3FY21 onwards.
In the coming week, participants will first react to the macroeconomic data and then focus would again shift to the earnings announcements. Needless to say, global cues and updates related to COVID-19 will also remain on their radar.
We’ve been seeing a gradual recovery, following upbeat global markets and favorable local cues. However, the concern related to rising COVID-19 cases in India and aboard is still lingering, and that, in turn, affecting the pace of economic activities.
We suggest limiting aggressive bets at current levels and awaiting clarity over the next directional move. As of now, the Nifty index is likely to trade within 10,500-10,950 zone next week and expect volatility to remain high on the stock-specific front. We advise traders to keep existing leveraged positions hedged while investors should focus on upcoming earnings announcements for cues.
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