Markets To Remain Buoyant, Stick To Fundamentally Healthy Stocks

In a truncated week, markets continued with their rally but for the last two trading sessions ended lower on weak cues and correction in the commodities space. Nifty index after scaling to a high of 16,700 ended the week at 16,450, while Sensex after hitting over 56,000 levels, ended at 55,329. Also, the broader markets continued to see a correction.

Nonetheless, because of the RBI policy of whatever it may take stance, Indian markets are performing better in comparison to global peers. Note in the global markets there was nervousness around Fed minutes confirming on tapering in near term. Now regardless of the mixed cues in the International markets, Indian markets continued to remain stable owing to a host of positives:

1. July retail sales was at 72% of the pre-pandemic level
2. Air traffic surged by 61% in June
3. Increasing occupancy for the hospitality industry
4. Nomura's India business resumption index crossed the 100 mark for the first time after dipping in March 2020 and settled at 101.2 levels.

So, as the third wave concerns continue to intensify in the US and elsewhere globally, there are indications that market may correct going ahead. But for now, markets in India are more or less ignoring the impact. Furthermore, the metal space will be highly looked out for after steep correction in the previous session of over 6%.

Oil which for the first half of the year witnessed an around 50% surge has corrected by over 11% in August alone owing to concerns around demand recovery for the commodity amid rampant spread of delta virus cases across the globe.

Technical indicators:

Nifty after a weak close formed a shooting star candlestick pattern that provides for mild retracement towards the short-term averages and Nifty could see a fall to 16,150 levels. And if the index breaks below this level there will be weakness on the indices for the near term. So, all and all indices are expected to remain buoyant. So, advise forward shall be to pick up only large cap or fundamentally sound stocks.

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