InvestorQ : What is the stock market outlook for trading on Monday 25 January 2021? Will the correction go on or will the markets bounce back?
Anamika Sodhani made post

What is the stock market outlook for trading on Monday 25 January 2021? Will the correction go on or will the markets bounce back?

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diksha shah answered.
5 months ago
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The previous week was a volatile week with two sharp bouts of correction in a short span of time. After Sensex scaled the 50,000 levels, it gave up over 1200 points in less than 2 days because most of the traders sought to book profits and exit leveraged positions. However, the pressure has come more from traders and not so much from global investors.

The coming days could see the influence of some positive results like Reliance and Ultratech. Both results were better than expected. While Ultratech saw doubling of profits, RIL profits grew by 25% despite fall in sales revenues, as digital franchise saved the day for Reliance. There are a total of 390 companies declaring results this week with few big names.

The good news is that FPIs were only marginal net sellers on Friday to the tune of Rs.636 crore while DFIs sold Rs.1290 crore. That is hardly any big foreign selling after Rs.160,000 crore has been infused in less than 3 months. While Biden taking over has been a positive, FPIs are a tad worried about the pandemic resurgence in China and parts of Europe.

Global cues have been rather mixed as global markets absorb the major changes one at a time. For example, on Friday, the NASDAQ was virtually flat but the Dow and European indices closed weak. However, SGX Nifty is trading with early gains of 50 bps on Monday and India could see a bounce after giving up big gains last week.

To sum up my response to your query, the markets are virtually at the crossroads at this point of time. The markets really need a strong trigger to decisively breach above 50,000 on the Sensex. The first real test will be the levels of 15,000 on Nifty and 51,000 on the Sensex. Ideally, the one indicator that can tell a story is the VIX.

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