Published on 25/03/2020 6:25:32 PM | Source: Motilal Oswal Securities Ltd

Daily Market Commentary 25 March 2020 by Mr. Siddhartha Khemka

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Below is the Views On Market commentary : Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Private Ltd

“The Indian equity markets recorded their third biggest gain ever, despite a three-week nationwide lockdown announced, in anticipation of a stimulus package by the government to tackle the economic blow of coronavirus. Even the recovery in global markets after the US Senate and White House reached agreement on a USD 2 trillion stimulus package for the US economy lifted the sentiments. Sensex rose 1862 points to close at 28,536 levels (+7%) while Nifty50 rose 517 points to close at 8,318 levels (+6.6%). The broader market also participated with both Nifty Midcap 100/Nifty Smallcap 100 up 3.3% each. All the sectors ended in green with Banks being the biggest gainer, up 8.4%. VIX corrected 7.9% to 77 levels.

Prime Minister yesterday announced an unprecedented three-week lockdown in the country, effective from 25th March, in a bid to contain the spread of coronavirus. The Finance Minister has announced several measures to ease the regulatory and compliance burden for taxpayers. The FM also promised that an economic relief package will be unveiled soon to alleviate the pain of lockdown in the economy. While the economic impact of this pandemic is inevitable and unquantifiable at this stage, we believe that the Indian markets are already discounting some of the pain – Nifty is down 36% from the recent highs in last one and half months and is now at a four-year low. The Nifty is trading at a trailing P/E of 14.7x, lowest in six years while trailing P/B of 1.9x is at its lowest since the Global Financial Crisis. Such significant correction has opened up significant investment opportunity for the long term investors. While it is very difficult to predict the bottom of the market, it always rewards investors in the long term who take the benefit of such sharp fall. Thus we suggest accumulating on a gradual basis. 

Technically, overall chart structure is still negative and this is mere a pull-back move of the ongoing corrective phase. At current juncture, resistance for Nifty is placed at 8500 and then 8900 zone, while support is now placed at 7800 then 7500 zone.”



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