InvestorQ : How do you see the stock market spanning out on Monday 23-May, and do you expect a bounce in the market or a correction in Nifty and Sensex?
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How do you see the stock market spanning out on Monday 23-May, and do you expect a bounce in the market or a correction in Nifty and Sensex?

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diksha shah answered.
9 months ago
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On Friday, the Nifty and Sensex showed a sharp bounce and closed the week with gains of over 3%. The mid cap and the small cap indices also closed with gains of 3.8% for the week. IN fact, the 1,534 points recovery on Friday, more than offset the sharp correction in the markets on Thursday. A lot will now depend on the global cues for markets this week.

In terms of structure, advance decline ratio of the Nifty 50 was strong at 48:2.Of course, Reliance led the way on Friday with more than 6% gains and was ably supported by the metal and auto stocks. At the same time, the fear index or VIX. tapered further to 23.10 levels with the rise in markets. However, in absolute terms it is still high.

FPIs sold Rs.1,265 crore in equities while domestic funds and LIC bought Rs.2,149 crore on Friday. The pace of FPI selling has come down Rs2.15 trillion of equity and debt are already sold. On Friday, Dow and NASDAQ were flat as stability returned to US markets. Europe was up on Friday while SGX bounced to trade about 65 points higher in early trades.

The dead cat bounce on Friday may be hard to sustain. Firstly, higher borrowings is likely to boost India’s fiscal deficit from 6.4% to 6.9%. That puts pressure on bond yields. FOMC minutes on Wednesday may put further pressure on markets with its hawkish tone. Recent IPO responses and post listing performances have been rather muted. Stay cautious.

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