InvestorQ : How do you see the Nifty and the Sensex trading on Tuesday, 05 January 2021?
Chandralekha Desai made post

How do you see the Nifty and the Sensex trading on Tuesday, 05 January 2021?

1 year ago

On Monday there was no sense of uncertainty or tentativeness as the Sensex also decisively crossed the 48,000 mark. Interestingly, it was the IT sector that actually led the rally anticipating good Q3 performance. Infosys crossed the $75 billion market mark for the first time in its history and its valuation gap with TCS is the narrowest in 10 years.

However, there could be some worries coming from Europe, especially the UK. On Monday, the comprehensive lockdown effective midnight announced by UK is expected to be followed by more EU nations. This is because the cases are multiplying and this is likely to be an overhang on the Nifty and Sensex in the short to medium term.

There seems to be no respite in buying by foreign portfolio investors. FPIs were net buyers of Rs.1843 crore on Monday while DFIs sold Rs.715 crore. After the heady performance in November and December, it looks like the FPIs are continuing their risk-off attitude in January also. However, a lot will also depend on the dollar value.

Towards the latter part of Monday, Dow and the NASDAQ lost nearly 1.5% after the sharp clampdown on activity by the UK on the back of rising COVID cases. The UK lockdown was effective from Monday midnight and is not a great signal. European markets would most likely react on Tuesday but the SGX Nifty is 70 bps lower in early trades.

The immediate short term trigger for the market will be the extent of lockdowns in the UK and the EU. Cases have been spiralling in these centres and the rub-off effect could have an impact on the markets across the globe, including India. However, the risk may be limited for India as the real story for now is more domestic in nature.