InvestorQ : What do you expect from the stock markets on 05 August and how do you suggest we prepare for trading the markets on Thursday?
ishika Banerjee made post

What do you expect from the stock markets on 05 August and how do you suggest we prepare for trading the markets on Thursday?

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diksha shah answered.
4 months ago
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Wednesday marks the third continuous day of gains for the Nifty. After gaining 245 points on Tuesday, the Nifty followed up with another 128 points rally on the Wednesday. By close on Wednesday, the 16,000 levels is no longer the issue as the Nifty settled comfortable above these levels at 16,258. It has now sustained above that level for 2 days on close.

One trend you could not miss out on Wednesday was the gradually declining advance decline ratio or the A/D ratio which turned unfavourable at 19:31. This was obvious even at a much broader level as the action was limited to banks and financials. All the four IPOs that opened for subscription on Wednesday were fully subscribed on Day-1 itself.

For the second day in succession, the foreign investors were net buyers to the tune of Rs.2,829 crore on 04 Aug. the total 2-day infusion into Indian equities has been more than Rs.5,000 crore and it remains to be seen if this trend sustains. Domestic institutions sold Rs.411 core of equities on Wednesday, but the key to watch is the FPI trend.

If you go by the sharp fall in the Dow Jones Index on Wednesday, then the markets could face pressure from the Dow by correcting nearly 323 points on frontline sell-off. COVID variants continued to put pressure on the US markets. NASDAQ and other European markets were marginally higher, but the SGX Nifty is trading flat to higher in early trades.

Normally, a market rally like the last 3 days includes a short covering component and that was apparent on Wednesday as the banks and financials rallied. However, the rally may need more legs to stand from here on.

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