Worries about COVID strain recede post AstraZeneca Chief claims of vaccine effectiveness

After rallying 17 per cent in the previous seven consecutive weeks, the bulls hit a pause button amid the discovery of a new strain of Coronavirus in the UK. However, after the initial trauma, Nifty recovered smartly in the remaining part of the week and ended the week with modest losses of 0.08 per cent. 

Meanwhile, the broader indices i.e. Nifty Mid-cap and Nifty Small-cap relatively underperformed the frontline indices as they lost 1.55 per cent and 0.80 per cent, respectively. Nifty Mid-cap and Small-cap rebounded from the support near the 50-EMA, which has been held since June (barring breach on one instance).   

Currently, nearly 96-98 per cent of the components of Nifty Mid-cap and Small-cap indices are trading above their long-term moving averages i.e. 200-DMA, indicating an in-built strength. FIIs continue to pour money into the Indian equities as they have been net buyers to the tune of Rs 41,325.37 crore, month to date. However, in the last couple of days, the pace of buying has slowed down a bit as compared to the earlier part of the month. This could be attributed to the festive season in the west as many FIIs desks are expected to be on vacation. However, one thing would be interesting to watch out participation from mutual funds as they could join the party to prop up NAVs and mutual funds and thus, we expect the market likely to remain buoyant. Stock-specific moves may continue but volatility could be witnessed as the week progresses on the back of key macro numbers, which are scheduled to release along with the December Series F&O expiry.

SGX Nifty in the early action indicates that the merry ride of the bulls is likely to continue as it was trading higher by 51 points at 13,804.50 levels. The statement of AstraZeneca Chief that the vaccine works against the new strain of coronavirus is acting as music to bulls’ ears. Sustaining above the 13,800 would open gates for a further upmove towards the 13,880-13,920 mark. 

The Asian indices are also seen jumping with joy on AstraZeneca Chief's claim. Japan’s Nikkei 225 and Hong Kong’s Hang Seng were up by 0.43 per cent and 0.39 per cent, respectively. Meanwhile, a mild profit booking was witnessed in China’s Shanghai Composite index.  

On Thursday, the action on Wall Street was lukewarm ahead of the holiday season but all the major indices eked out modest gains as news emerged that the UK and European Union have struck a historic trade deal. European indices too ended the sessions in green.