Monday blues for markets; prefer buying-on-dips strategy

In the last week, the benchmark indices continued their northward journey and recorded fresh record highs as Nifty moved past the 13,250 mark and Sensex too crossed the milestone of 45,000 mark for the first time ever.

The FIIs continued their buying spree into the first week of December too as they infused more than Rs 10,000 crore, while DIIs sold over 6,000 crore of equities in the first week of December.

Meanwhile, India VIX plunged 9 per cent to 18.03 levels during the week and with this, it recorded its lowest close seen in the last three months. A rising market and cooling of volatility is a perfect bull case scenario.

SGX Nifty indicates that the markets may face some turbulence on Monday morning as it is trading down by 45 points at 13,281 levels. This is mainly due to negative cues prevailing in the Asian indices. The market participants would like to grab this opportunity and prefer to buy in dips as the major trend of the market remains completely in the favour of the bulls.

Asian shares fell on Monday morning despite a positive close on Wall Street on Friday. Hong Kong’s Hang Seng is down by nearly 1.5 per cent, followed by China’s Shanghai and Japan’s Nikkei 225, which were down by 0.39 per cent and 0.31 per cent, respectively.

Friday turned to be a fabulous day for the Indian stock markets as Nifty and Sensex, for the first time in history, closed above the mark of 13,250 and 45,050, respectively. Nifty advanced 0.95 per cent and Sensex surged 1 per cent.

Reverse Bank of India (RBI) on Friday kept its policy rate unchanged but it revised the economic growth projection upwards for FY21 and assured ample liquidity for the stressed sectors, which acted as music to bulls’ ear. VIX plunged 5 per cent and closed at 18. On the sectoral front, all the sectors ended in green with Bank Nifty being the showstopper, as it gained 2.05 per cent.  

US stocks climbed to new record closing highs on Friday despite disappointing news of the slowest US jobs growth in six months. In fact, the poor jobs’ report provided solace to the market participants as they believed that the fiscal stimulus deal could pick up momentum soon to help revive the slowing Coronavirus-hit economy. 

Dow closed above the 30,200 mark, S&P settled at the 3,699 mark and the tech-heavy Nasdaq closed at the 12,464 mark. European indices too finished the final trading session of the week on a buoyant note as the vaccine optimism continued to be the main catalyst, which in turn, flamed hope of an expedited economic recovery.