Indian markets ended moderately lower on Friday but posted their sixth weekly gains. The NSE Nifty 50 ended 0.19% lower at 11,194 on Friday while S&P BSE Sensex closed 0.03% lower at 38,128.9. But both the indices surged over 2.6% on a weekly basis. Global markets also retreated on Friday as China ordered the United States to close its consulate in Chengdu, in retaliation for being told to shut its consulate in Houston earlier this week.
Next week, many market heavyweights including Reliance Industries will announce their earnings. On the global front, US Senate Republicans are expected to unveil their proposal for a fresh round of coronavirus aid. Also, Fed policy makers will meet next week, although expectations are low for any surprises.
Renewed US-China tensions, surge in coronavirus cases and strong gains over the past six weeks have led to some analysts turning cautious.
"After the recent spike in Nifty, market is expected to consolidate for a couple of days, given flaring US-China relations and persistent rise in virus cases. Thus the market volatility is likely to continue. We would advise investors to continue with their defensive portfolio approach given the high valuations and maintain stock specific action. Traders on the other hand are advised to stay cautious and keep booking profit at regular intervals," says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
Dalal Street week ahead - Here is what analysts say
Sameet Chavan, chief Analyst at Angel Broking
"On the upside, 11250 is the level to watch out for; whereas, 11050 has now become a key support. As an optimist, one should remain hopeful as long as we are trading above this swing low (11050) and expect the market to give breakout in upward direction to extend the move towards 11350 – 11400. However, a breach of lower end should be treated as a short-term pause to see some decent profit booking."
"We continue to advise traders to remain light and keep booking profits wherever it's necessary. Also, if our markets have to see any upward move, the banking space plays a vital role in this. Hence, one needs to see whether Bank Nifty manages to convincingly go beyond 23000-23200 or not in the forthcoming week."
Ajit Mishra, VP Research, Religare Broking
"In the coming week, schedule derivatives expiry of July month contracts combined with the on-going earnings season would keep the volatility high. A long list of prominent names like Kotak Bank, Tech Mahindra, Bharti Airtel, Ultratech Cement, Dr Reddy, Maruti, HDFC, Reliance Industries, IOC and SBI will be announcing their numbers during the week along with several others. Apart from the above events, global cues and updates related to the COVID-19 will also be on the participants’ radar."
"Though the benchmark is gradually inching higher with every passing week, the participation is largely limited. Also, the Nifty has now reached closer to the major hurdle of 11,350 and the oscillators are looking stretched. At the same time, we’re closely following global indices and any correction in the US markets might derail the prevailing momentum. We’ve seen such situations in the past as well wherein the benchmark was led by a handful of the index majors but hardly spared any stock when it declined. It becomes difficult for the participants to navigate during such conditions. We thus advise preparing beforehand by limiting naked leveraged trades and keeping the existing positions hedged."
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
"A long bull candle was formed in this week, as per weekly timeframe chart, after the formation of hanging man type candle pattern of last week. Most importantly Nifty formed unfilled opening weekly gap with this candle. This is rare formation and previously in the last two occasions, such weekly opening upside gaps have been filled subsequently in the next week, by intra-week decline. Hence, there is a possibility of profit booking in the next week."
"The short term trend of Nifty is range bound with positive bias. Having placed at the hurdle of 11250, there is a possibility of minor downward correction by early next week. A sustainable move above 11250-11300 levels could pull Nifty towards 11550-600 in the next 1-2 weeks. Important lower support is placed at 11100-11050."
Jimeet Modi, Founder & CEO Samco Group
"Nifty50 closed higher after opening with a gap-up at the start of the week. This is the sixth consecutive week that Nifty is closing with gains. The rally in the index is being supported by positive development on the vaccine front and participation from some of the heavyweights from oil & gas and IT sectors. However, the Bank Nifty which has been an all-weather partner has seen a fall in momentum. The banking index has formed a bearish shooting star pattern but managed to close on a mildly positive note. The divergence between Nifty and Bank Nifty is going on for last three weeks. We continue to maintain a cautiously bullish outlook on Nifty with immediate support and resistance placed at 11000 and 11240 respectively. However, a break below 10900 may lead to short term weakness."
Source - LIVE MINT