A zig zag move lower quite likely this this summer with a retest to possible Nifty 7500 and then probably zig zag higher after U.S Nov elections.
That brings us to our call of the week which suggests that investors’ confidence has got shaken out again with a deeper shade of darkness to equity markets and we suspect, this perma-bull camp are likely to sulk on the side-lines. Amidst this backdrop, the outlook going forward remains murky to dim and aggressive downside targets on Nifty seen at 7511 with intermonth perspective. For the week, Nifty’s biggest support seen at 8989. Selling on strength should be the preferred strategy for the day. Fuelling negativity are subdued quarterly results, zero sales from auto OEMs, contraction in manufacturing activity and most importantly — an extension of lockdown to May 17th. Yes, investors are seen grappling with worries that a return to normal
economic activity may take longer than expected.
Honestly speaking, the renewed friction between Washington & Beijing could act as the next black swan for our stock markets. The outlook going forward remains murky to dim and amidst this backdrop Sensex & Nifty could hit new 2020 lows.
Technically with intraweek perspective, Nifty’s biggest support seen at 8989. Below 8989, expect waterfall of selling towards 8201-8251 zone. Selling on strength should continue to be the preferred strategy.
The big question: How bad?
Honestly speaking, making short-term market prognostications is not easy. Many market participants will concur that it’s a fool’s errand. Perhaps it could be. But at the moment there are catalysts which are tilting in favour of negativity. This market is clearly losing momentum, and many a momentum stocks are looking overbought. There is high probability that we are likely to witness significant selloff.
The momentum indicators are still flashing red. And amid this backdrop, there is a significant and rising risk of Nifty crashing to 10,000 mark the big question:
Well, the most negative catalyst surrounding is COVID-19. We say so because COVID-19 comes without a certain end date. The Indian economy is in a free-fall as a result of the coronavirus outbreak, while Dalal Street ended April with gains of 14.62%.
We suspect, the street will not get confidence until there is a medical solutions to COVID-19.
Long story short: The need of the hour is a therapy or a vaccine for COVID-19. Establish long positions only if you sense that coronavirus is losing.
And that brings us to our call of the month which suggests volatility will continue to be the hallmark as long as traders struggle to find a floor to the selling in response to the mounting coronavirus crisis. Technically, the most watched support on Sensex/Nifty is at 25,501/7,501 mark respectively. Below 25,501/7,501, selling stampede could knock down Sensex/Nifty further to its biggest support at 21,501/6,151 mark respectively. Please note, confirmation of strength only above Sensex/Nifty 36,101/10,601 mark on closing basis.
The biggest challenge in 2020 would be revival of Indian economy — especially after the demonization which has dented India’s growth prospects for 4 years. Possibilities of fiscal slippages are the biggest concerns for our stock markets. The big investors’ camp would be also eyeing RBI’s & Governments’ policies ahead of the upcoming US elections in 2020.