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Below is the Daily Market Commentary By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd

Equity markets remained positive during most part of the session led by positive global cues but witnessed profit booking towards the fag end to end flat. Nifty/Sensex ended 36/28 points higher (+0.3%/0.1%) to close at 14,618/ 48,832. Broader markets outperformed with Nifty MidCap 100/Nifty Smallcap 100 up +1.0%/+1.1%. Sectorally it was a mixed bag, with Pharma being the biggest gainer – up +1.9%, followed by Auto, IT and Media – up more than 1% each. FMCG, Metals, Energy and Infra too ended with modest gains. Banks and Financials were down -0.4%/-0.2%, followed by Realty (-0.4%) which largely capped the gains in the market. India VIX fell down by 2.33% from 20.89 to 20.40 levels.

Global cues are positive as corporate earnings beat estimates so far and US and Chinese economic data point to a robust recovery. Even plunge in US bond yields boosted sentiments. On the domestic side, Nifty ended with marginal gains as the continued surge in covid cases and fresh restrictions by various state governments continue to worry the market. However, with government’s speedy approval for other vaccines, there are hopes of pick up in vaccination process which is somewhat allaying the fears. Even normal monsoon projection somewhat cheered the market. Wipro was top Nifty gainer- up +9%, after it reported better than expected results.

Technically, Nifty formed a Doji candle on daily scale while a Hammer candle on weekly scale which indicates that declines are being bought but follow up is missing at higher zones. Now, it has to continue to hold above 14500 for an up move towards 14700-14850 while support exists at 14350 and 14250 zones.

Going ahead, Indian markets are likely to be highly volatile and would be an interplay of resurgence in COVID-19 cases and the pace of vaccination. As availability of more vaccines and the pace of vaccination picks-up, we expect the narrative to gradually shift from Covid-19 and restrictions back to growth/cyclical recovery and rebound corporate earnings. We believe this correction is a buying opportunity and it doesn’t change the medium term thesis. Valuations at 20x FY22 Nifty EPS, are not exorbitantly expensive either given the benign equity-bond yields metric and turn in earnings cycle after a decade-long tepid earnings delivery.

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