Trekking through the markets
Faster Rural recovery hopes lead equities higher
Strong tractor sales, more food subsidy for poor, and hopes of stronger and faster recovery in rural markets led the auto and consumption stocks to rally hard. The market breadth was positive but not as strong as it has been in recent weeks. Volatility eased further. The level of activity was much lower than past 3 weeks, indicating that momentum may be slowing down.
Auto, and consumers were the best performing sectors, while realty, pharma and PSU banks were notable underperformers. INR gained further while bond yields eased.
Encouraging macro data brings back risk appetite
The global markets witnessed a sharp rally in risk assets, as encouraging macro data from US, China and Europe shadowed the virus concerns. Positive news on vaccine development also helped. Equities rose, volatility subsided, bonds sold off and USD was weaker. Crude oil jumped higher on OPEC deciding to cut production sharply. Gold was flat.
Outlook for the week
The near and short term outlook and trend for Indian equities remains unchanged from the last week. The daily and weekly trend continues to be positive while the monthly trend remains neutral. The momentum has eased a bit indicating fall in probability for a dramatic change in outlook and trend in the near term. For this week-
· The day traders may avoid trading in 10355-10445 nifty range. The long positions may be held with a stop loss of 10375. Outstanding short positions may be held only with a strict stop loss of 10828. New shorts may be avoided till Nifty closes firmly below 10142 level. Expect a sharp up move if on any day Nifty opens with a gap above 10829 and sustains above this level for 2 hours
· For Bank nifty, long positions may be initiated only if it remains above 21514 level; with strict stop loss of 21492. All short position must be held with a strict stop loss of 21923.
Other relevant readings
Market trend and outlook
Indian markets last week
Global market performance last week