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Markets Next Week: A Short Covering Rally Likely

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It was a bad week for the markets, with the benchmark indices seeing their worst fall since late Oct, 2018.The Sensex dropped for the seventh straight day on Friday, as Foreign Portfolio Investors sold heavily. The benchmark Sensex lost 2.01 per cent this week, while the Nifty ended 2.10 per cent lower.

On Friday, heavyweights like HDFC and TCS saw some selling pressure, which dragged the indices lower.

Markets Next Week: A Short Covering Rally Likely
 

Short covering likely

Markets next week may see some bounce back, given the robust closing for the US markets on Friday. However, much would depend on the global markets. Interestingly, small and midcap stocks, which saw some recovery towards the middle of the week, collapsed once again in trade on Friday.

Shares of Yes Bank saw a stunning rally on Thursday, with the stock jumping as much as 30 per cent, which is fairly large. However, it is likely that the stock may react in trade on Monday, following a rap from the RBI for making selective disclosures.

Several bluechip stocks during the course of the week plunged to new 52-week lows. Among these include names like Vedanta, TVS Motors and VST Tillers and Tractors which fell to new 52-week lows.

Dr Reddy's was clearly the most volatile in trade on Friday, after the stock rebounded a huge 32 per cent from the day's low after USFDA observations.

On Friday, the Nifty Pharma index ended 3.1 per cent lower led a fall in Glenmark and Lupin.

Markets are expected to remain choppy in the run-up to the general elections. Market men are looking at the possibility of the NDA returning to power, with a lower majority. However, if either the Congress or the BJP alliance fails to reach the half way comfortably, there maybe a swift reaction in the markets. For the time being it is best to stay light and avoid over exuberance.

Read more about: stock market
Story first published: Saturday, February 16, 2019, 10:35 [IST]
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