Nifty ended the bitter-sweet week with a close just below our turnaround level of 17970, retaining enough hope for a push higher next week. Bitter, because of the multiple visits to December’s lows ensuring that panic persisted through the week. And, sweet because, none of those attempts managed to crack below the December low sufficiently enough to lead to a collapse. So, here we are, hopeful and concerned with equal measure, as we count down towards the Union budget, with traders seen unwilling to raise big bets on either side. Yet, it can be said that the underlying vibes have been negative so far, with bad news from China on the Covid front continuing to flow in with regular frequency, and with the inflation threat continuing to hang like a Damocles sword. It is amidst this that the soft US CPI data has come in. With these in perspective, let us have a look at how stocks and indices are positioned.
All but three sectoral indices on BSE ended with a negative close, but they were not steep enough to be alarming, as the worst performers were metal and IT, having fallen 3.7% and 3% respectively. Performance on the upside was also modest with the best gain recorded by the consumer durable index with just a 3% gain. In fact, on a see-sawing week, the weekly gains may not tell the whole story, which is why we looked at how many stocks fell below December’s lows, as Nifty had briefly sunk below the same last week.
Over the last week, while no more stocks from the Nifty 50 left below their respective December lows, more stocks have fallen below the benchmark, market-wide. But they are still not large enough to suggest a breakdown, as only 20 and 25% of stocks of the mid and small-cap indices respectively have slipped below the previous lows, as opposed to 16 and 10% respectively of the mid and small-cap indices a week back. Among sectors, 50% of consumer durable stocks are below their last month’s lows, but 25% of them are challenging near-term peaks as well, which in turn suggests that there is indeed an underlying resilience.
Nifty is poised to make a 200-point advance this week, should it succeed in reclaiming 17970, which is important to keep the 17300 view at bay. Bank Nifty too should start the week on a positive note, but a directional upside is less likely, with 43700 expected to remain a near-term lid for now, until more consolidation. These views are also in acknowledgement of VIX maintaining an upside trajectory.
First published in Financial Express