What is your stock market outlook for Monday 11th April? Do you see the rally sustaining after the strong bounce in the markets on Friday?

The Friday bounce actually compensated for the correction on Thursday, and to that extent it was positive. In fact, on Friday the Nifty closed 145 points higher as there was a lot of short covering that was visible in infrastructure stocks. Global sentiments continued to be tentative but the RBI policy has given hope of a dovishness, though not always good.

In terms of the market structure, the overall breadth of the Nifty was extremely encouraging with A/D ratio at 42:8. At the same time, the VIX or the Volatility Index tapered lower to 17.69 levels, hinting at buy-on-dips market. Pharma stocks were under pressure but the HDFC twins came under pressure due to insurance related challenges to the merger.

Foreign investors net sold Rs.575 crore in equities while domestic funds were marginal sellers on Friday. HDFC twins saw a good deal of selling over the last few days. On Friday, Dow was up 138 points while NASDAQ was down 186 points. European markets were up 160 bps while SGX Nifty index is trading 57 bps lower in early trades on Monday.

Let me turn to the outlook for market. On the positive side, FPIs turned net buyers in April 2022 but that may not sustain for too long if the Fed continues to persist with its hawkish stance and the RBI with its dovish stance. The monetary divergence after Friday RBI policy on Friday, is the biggest risk to FPI flows and to the market sentiments overall.