What is your view on the market for Monday 21 December 2020? Do you see the markets inching higher during Monday?
Answer
Answer
The market is in uncharted territory so most of the technical levels will not really. What really matters at that point is that the momentum is strong, liquidity is abundant and the flows are positive. That could sustain markets even at higher valuations.
Looking back at last week, the Nifty and Sensex were volatile on Friday 18 December but managed to close in the positive after IT stocks rallied towards close. The VIX has been holding around the 19 levels adding to the rally. The A/D ratio continues to remain positive.
Trade a little cautious on PSU Banks after the Canara Bank issue. PSU banks are likely to be under pressure on Monday after the CBI launched investigations into the Rs.7920 crore alleged scam at Canara Bank. This could halt the PSU bank rally and is best to stay out.
Foreign Portfolio Investors or FPIs were net buyers to the tune of Rs.2721 crore while DFIs sold Rs.2425 crore on Friday. Between November and December, the FPIs have infused close to Rs.115,000 crore, making 2020 one of the best years for FPI flows into India.
Markets across the US, Europe and Asia were in the negative on Friday. European markets are likely to be under pressure due to resurgence of COVID and uncertainty over BREXIT deal between the UK and EU. SGX Nifty has been trading weak in early trades.
This is what I typically call a buy-on-dips market. With the VIX around 19 and the Nifty range defined as 13,500 to 14,000, we do anticipate that the real risk would only arise if the Nifty falls below this range with volumes. That does not look too likely now.