The Domestic equity market traded in a narrow range but with wide overnight gaps during the last week. Making people cautious of open positions.
Faint-hearted traders are out of Dalal Street, as nifty futures open interest fell lowest in the 15 years, making the market going in uncharted dominion.
On one hand, there’s a continuous rise in Coronavirus cases day by day and on the other increase in liquidity eery in either from U.S feds or from Indian Government by announcing stimulus in form of expansion of credit to various bad coronavirus hit sectors of the economy.
Liquidity Injection Despite of Surge in Covid Cases
Narendra Modi, Prime Minister synthesized a package worth Rs 20 Lakh crore to inject liquidy and to sustain the livelihood by providing targeted loans to MSMEs (Micro, Small, and Medium Enterprises), Farmers, Migrant Workers among others.
Nonetheless, the core of the issue either is solvency, visibility or availability of businesses, impaired short term or for long terms have not been addressed. The government response was poor but the monetary response was very aggressive, resulting in a height of delinquencies in the financial sector because of the increase in debt levels and rising pressure of inflation.
The relief package was to help to balance short or medium terms stability in the economy but long-term stability had not cleared yet.
Technical Analysis Of the Week:
Nifty 50 was unable to cross 9,900 level on the higher side but took reverse gear from the 50% of the Fibonacci Resistance. It also indicates rally coming to an end as night formed 3 inside down candlestick pattern along with a lower closing. While the broader market position remained weak in the last two weeks, large-caps are also witnessing weakness and another round of selling signal as the relief stimulus was not able to support the market.
We expect the market to go in flow with the global market as it is not a country-specific problem but a global pandemic. As bearish view on the domestic equity is maintained. The resistance on the upside trends stands at 9600 whereas any breach in 8900 will trend the downward trend.