Domestic markets are poised to open cautiously on Monday, reflecting a weak global signal. Analysts anticipate a volatile market, particularly in the mid- and small-cap sectors. The unrelenting selling by foreign portfolio investors is expected to pose a challenge for the market. Of particular concern is the VIX, which has now surpassed 18, a significant threshold that signals market nervousness and should be carefully considered by investors.
Gift Nifty at 22,090 against Nifty May futures value of 22,140 indicates a downward bias. Equities across Asia-Pacific region are down in early deals on Monday due to weak China.
Last week, FIIs net sold ₹18,343 crore (>$2 bn) in the cash market, while DIIs provided buying support with a net buy figure of ₹14,657 cr. For the week, Nifty and Sensex closed with losses of 1.9 per cent and 1.6 per cent, underperforming global markets. Broader markets bore the brunt this week, with cuts of 3.3 per cent and 3.8 per cent for the BSE Midcap and SmallCap indices, respectively, said SBI Securities in a wrap.
“Next week, we expect volatility in the markets to continue. The earnings will keep trickling in leading to stock specific action continuing. Nearly 440 companies are due to announce their 4QFY24 results between 11th May to 18th May. Macroeconomic data like India and US CPI data, trade deficit numbers and ongoing elections will be key developments to be tracked,” it added.
According to Ajit Mishra – SVP, Research, Religare Broking Ltd, given the pressure across most sectors, traders are advised to adjust their positions accordingly, restricting long positions to sectors such as FMCG and automotive that exhibit strength amidst the downturn.
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities, noted a significant battle between call and put writers at the 22,000 Strike in Nifty. This level, which saw both call and put writing, is a crucial point that could potentially determine the market’s direction. If put writers (Bulls) exit from the 22,000 Strike, it could lead to a further fall in Nifty, a scenario that traders should be prepared for.
According to him, Bank Nifty continued its slide for the seventh consecutive day and closed 67 points lower at 47,421. “Strong call writing was observed at the 47,500 Strike in Bank Nifty. The 47,400 Strike witnessed a fierce battle between both the call and put writers. An up move is likely in Bank Nifty if call writers exit from the 47,500 Strike,” he further said.
“We advise investors to exercise caution and accumulate good quality stocks during this volatile phase,” SBI Securities said in its weekly wrap.