Buoyed by multiple factors like the ‘ceasefire’ between India and Pakistan, expectations of a trade deal between India and the US after the statement of President Donald Trump on last Thursday that India offered the US, a no-tariff deal and robust FII buying in equities; Indian equity market witnessed a stellar rally during the week ended. NSE Nifty and BSE Sensex touched intraweek highs of 25,116.25 and 82,718.14; and ended the week at 25,019.80, up 4.21 per cent; and 82,330.59, up 3.62 per cent respectively. The strength in the benchmark indices translated into broader market gains with the BSE Midcap/Smallcap indices gaining 6.9 per cent and 9.2 per cent, respectively. Foreign Portfolio Investors (FPIs) were net buyers of Indian equities for the fifth consecutive week. It is pertinent to observe that ‘exuberance’ in the market was such that nearly Rs26.5 lakh crore in investor wealth was minted in a week. April inflation data also dropped to 3.16 per cent, the lowest in nearly six years—raising hopes of a dovish RBI in the coming policy meeting. With crude oil prices sliding, a normal monsoon expected, and global central banks leaning dovish, there’s room for this rally to run. Nifty is now less than five per cent away from its all-time high. Investors are cautioned that “when the ride is this fast, the brakes can be brutal”. Factors that are likely to impact market movement in the coming week are remaining Q4 results of the earnings season and any likely developments on the India-US trade deal. Q4 results season clearly shows that India’s economic momentum appears to be bottoming out, and structural growth drivers such as supply chain diversification are crucial support drivers. Sectors that demonstrated strong performance this quarter were mainly financials, automotive, and oil & gas. Going ahead, strong demand in rural areas, normal monsoon conditions, favourable tax measures, and a benign interest rate cycle are important factors for earnings recovery in upcoming quarters. There is continued speculation in foreign exchange markets that Trump could seek agreements with other countries to devalue the dollar as part of trade deals. If the Trump administration were able to engineer a weaker dollar through deals with other trading partners, the Federal Reserve is unlikely to cut interest rates given the prospect of higher import costs. However, over the weekend President Donald Trump said in a social media post the US Federal Reserve should cut rates ‘sooner, rather than later.’

Maintain a bullish outlook on the market and advise investors to adopt a buy on dips approach. This is no longer a market for broad index bets, but a stock picker’s market.

You are an investor, not someone who can predict the future. Base your decisions on real facts and analysis rather than risky, speculative forecasts.

F&O/ SECTOR WATCH

Following news of a ceasefire between India and Pakistan; the short sellers scrambled to cover their positions and renewed exuberant speculative buying triggered sharp rise in volumes in the derivatives segment. In the options market, prominent Call Open Interest for Nifty was seen at the 25,500 and 25,000 strikes, while the notable Put Open Interest was at the 25,000 strike. In near term, key level to watch will be 25,000 level. Concentrated activity between 25,300–25,500 Call and 24,800–25,000 Put strikes shows immediate hurdles at 25,300 and sturdy support at 24,800. For Bank Nifty, the prominent Call OI was seen at the 55,500 and 56,000 strikes, whereas notable Put OI was at the 55,000 strike. Implied Volatility (IV) for Nifty’s Call options settled at 14.22 per cent, while Put options conclude at 15.47 per cent. The India VIX, a key market volatility indicator, closed the week at 16.89 per cent. India VIX collapsed 24 per cent, signalling a dramatic fall in perceived risk. The Put-Call Ratio of Open Interest (PCR OI) for the week was 1.34. With the Nifty soaring above its seven-month high, the message is loud and clear: bulls are back in charge. In the upcoming week, Nifty is likely to trade within the range of 25,500 to 24,800. The undertone remains bullish and any dip can be considered as a buying opportunity. Stocks looking good are Bajaj Auto, IRFC, Inox Wind, NCC, Patanjali, Ramco Cements and Paytm.Stocks looking weak are Chambal Fert, Muthoot Finance,NTPC, Torrent Power, UPL and Voltas.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)