Soft start for the markets today!

Indian markets may witness a soft opening as SGX Nifty indicates a minor drop of 11 points at the opening bell as cues from Asian markets are negative and a pullback was seen from higher levels on Wall Street in the latter half of trading session overnight. On Wednesday, Nifty closed above the two-day high or this week’s high. This is the second time, Nifty closed above the prior bar higher after Friday. This may be because of expiry hurry to close short positions. Further, theoretically, any rise or fall does not happen in a straight line for a longer period of time. It takes some rest before continuing the trend and at some point of time; this resting will become a counter-trend rally. In the past bear markets, these counter trend rallies were retraced about 38.2 to 50 per cent of the prior downfall. If we believe that history repeats itself then, expect at least 38.2 per cent retracement of the downfall, which stands at around 9,390-9,400 levels.

Asian markets are trading in red on Thursday, following a mixed close on Wall Street. Japan’s Nikkei 225 has plunged almost four per cent. This is because Tokyo’s governor requested the residents to stay at home this weekend, amid a jump in Coronavirus cases. Hong Kong Hang Seng and China’s Shanghai Composite is down by 0.93 and 0.07 per cent, respectively.

Back home, Wednesday’s session turned out to be a wonderful one for the bulls as the bourses gained nearly seven per cent and logged biggest one-day gain in terms of percentage, amid short covering on the back of domestic stimulus package and US announcing US$2 trillion stimulus package. Nifty ended above 8,300 and BSE Sensex closed above 28,500 mark. In the broader market, Nifty Mid-cap and Small-cap rose 3.32 and 3.30 per cent, respectively. On the sectoral front, all the indices ended in green. Nifty Financial Services, Nifty Private Bank and Nifty Bank led from front and emerged as the top gainers.  

In overnight development, US market that was seen sky-rocketing on Wednesday, lost steam in the last leg of the trade post reports of a discord among a few members of the senate over Coronavirus stimulus package. The tech-heavy Nasdaq dropped half a per cent, while, Dow and S&P 500 jumped 2.4 and 1.2 per cent, respectively. Besides, European markets ended higher on Wednesday.