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Below is the Views On Daily Market Commentary by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd
“Equity markets bounced back today after three days of continuous fall, showing recovery from budget blues post strong PMI data. Nifty ended 0.5% higher to close at 11724 amidst a highly volatile session. Broader market performance was mixed with Nifty Midcap 100 up 1.1% while Nifty Smallcap 100 was down 0.1%. Majority of the sectors ended in green except IT (-1.3%) and Pharma (-0.5%). Realty, Auto and Metals were the biggest gainers gaining more than 1.5% each. Chinese market plunged nearly 8% as markets opened after an extended Lunar New Year break. While global markets were relieved that the UK finally exited the EU, concerns over the growing Chinese coronavirus continue to dampen market enthusiasm.
The manufacturing PMI data for India hit a near eight-year high in January, driven by sharp rise in new business orders amid a rebound in demand conditions that led to rise in production and hiring activity. This boosted market sentiments. However, the budget has been a disappointment for the equity markets and failed to meet its expectations. It puts the hopes of a sharp corporate earnings recovery at risk. With budget event behind, the market’s focus should revert to fundamentals, viz. corporate earnings growth, global cues around the spread of Corona Virus and its potential impact on global growth. Given the absence of sharp growth revival, we expect the market to stay narrow – select sectors with better earnings visibility will continue enjoying valuation premium over the broader markets.
Technically, Nifty formed a positive candle on daily chart. Going forward, if it sustains above 11750, then we may see a bounce towards 11830 – 11900 levels. However, the overall bullish sentiments got dampened and thus traders should not remain aggressively on long side. On downside, a break below its immediate support of 11600 may lead to further correction towards 11500 and then 11333 levels.”
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