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

Global cues were weak as US markets battle between hedge funds and retail investors and a row in Europe over COVID-19 vaccine supply cooled risk appetite. On the domestic side, Nifty witnessed a volatile session with stock specific moves as the overall mood of the market remained subdued. Nifty posted second consecutive weekly drop in eight months and fell for the first time in all five sessions of the week since February last year. It has now declined over 1,000 points from its all-time high. For FY21, Economy Survey estimated the economy to contract by 7.7% and sees FY22 real GDP growth at 11%, which failed to cheer the market. After the Economic Survey 2021 advocated adequate capitalization of PSBs, the sector witnessed remarkable gains.

Technically, Nifty continues its formation of lower top - lower bottom from the last five sessions and formed a Bearish candle on daily scale. Now, till it remains below 13800, bounce could be sold and weakness may be seen towards 13500-13300 levels while on the upside key hurdle exists at 13800-14000 levels. India VIX moved up by 4.33% to 25.34 levels. Surge in volatility due to selling pressure and ahead of the Budget 2021, could keep volatile swing with limited upside in the market.

Going ahead, markets may continue to remain highly volatile amidst ongoing earning season and Union Budget 2021 on Feb 1. Expectations from the budget are running high. However, the government’s fiscal response in 2020 indicates certain inflexibility and the lack of resources to stimulate the economy. We would suggest investors to take opportunity of this fall and accumulate quality stocks on dips while traders should be cautious with stock specific action. Market would also track RBI’s monetary policy next week along with BoE’s monetary policy for further cues.”

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