Indian markets consolidate after massive fall; Nifty Pharma seems to be in pink of health

Update: Indian markets continue to consolidate with Nifty facing resistance around the 100-DMA (14,331). However, Nifty Pharma and Nifty IT are the two sectoral indices that have entered into a positive zone. Meanwhile, Nifty Pharma is leading from the front as it has gained a quarter of a per cent.   

Among Nifty Pharma constituents, Dr Reddy’s emerged as the top gainer. Moreover, the stock has witnessed a long build-up as a rise in the price is coupled with the rise in the open interest.    

Update: The stock of Jubilant Pharmova’s rallies over 8 per cent after the company informed that its subsidiary, Jubilant Pharma has announced the development of a novel oral formulation of Remdesivir with successful completion of safety and pharmacokinetic/absorption studies in animals and healthy human volunteers.   

Jubilant has sought authorisation for additional studies for this novel oral formulation from Drugs Controller General of India (DCGI). Jubilant is hoping to provide an affordable, more convenient, easy-to-administer, and potentially effective treatment option for COVID-19 patients. The proposed oral treatment is expected to be for 5 days (duration similar to the injectable dosage form).

Remdesivir is the first and the only anti-viral drug, fully approved by USFDA for the treatment of patients with COVID-19, requiring hospitalisation.   

Update: Indian equity markets had shown a smart recovery from the lower levels as Nifty reclaims its 14,300 mark, but it's still trading down by 2 per cent while Sensex is down by 1,000 points. The broader markets were also down by over 2 per cent with Nifty Midcap 100 and Nifty Smallcap 100 plunging 2.35 per cent and 2.04 per cent, respectively. 

The new debutant, Macrotech Developers made a gloomy listing on the stock exchanges today amid frail market conditions. The issue price was set at Rs 486 apiece, whereas the stock opened at Rs 436 on NSE and is currently trading at Rs 462, but it's still below the issue price.    

Among stock-specific action, the stock of Nureca is locked at the upper circuit and has registered a fresh all-time high of Rs 1,105.50 on NSE. On a month-to-date basis, the stock has gained more than 80 per cent

Update: After logging gains for three consecutive days on Friday, the rose-coloured glasses of D-Street investors have cracked now as Indian markets recorded a massive plunge at the time of Monday's opening bell. 

Nifty has slipped below its prior swing low as it's down by nearly 2.5 per cent. Meanwhile, Sensex lost nearly 1,250 points. India VIX has jumped more than 10 per cent and it's back again above the 22 mark.   

The fear is back on the D-Street as the alarming spike in the COVID-19 cases in the country as well as the stringent restrictions implemented thereafter is spooking the market participants. Further, India’s growth prospects for FY22 appear to be darkening again as the sporadic lockdowns, mobility curbs and night curfews are likely to take a toll on the economic activity.   

All the sectoral indices are trading in red with not one, but six sectoral indices witnessing a fall of more than 3 per cent. The leader of the pack is none other than Nifty PSU Bank, followed by Nifty Bank. 

Talking about the market breadth, it is completely in the favour of decliners. Moreover, in Nifty 500, more than 150 stocks were trading down in the range of 3 per cent-5 per cent, which is quite surprising. On NSE, 30 stocks have logged a new 52-week low.   

In the week gone by, Nifty started off with a big gap down and registered one of the biggest falls of the year 2021. What was more awful was that India VIX jumped 16 per cent and the fear factor subsidised in the subsequent trading sessions.  

As a result, Nifty witnessed a rebound and entered into a bearish gap zone, which was registered on April 12 between 14,652-14,785 levels before signing off the last session of the week with an indecisive formation. Monday’s massive fall followed overshadowed the gains of the next three days, leading Nifty to end in red for the second successive week.   

Interestingly, even the weekly chart depicted an indecisive formation. Most importantly, the index on the weekly chart formed back-to-back indecisive candles. This clearly echoes the state of confusion amongst the market participants as they are too naïve about the future direction. Further, the FIIs also have taken their foot off the gas as they are now seen taking profit off the table. Month-till-date, FIIs have been net sellers to the tune of Rs 2,596.76 crore.  

On the weekly chart, Nifty has formed a lower top & a lower bottom, as compared to its prior week; however, an important point that draws attention is the long lower shadow. Both the weekly charts carried a long lower, which indicates buying demand emerging at the lower levels. Moreover, buying demand emerged from the 61.8 per cent retracement of the upmove.   

Nifty is showing the formation of consistent lower highs with horizontal support on the weekly chart placed around 14,250 levels over the last two months. Hence, it’s important to watch whether Nifty would be able to continue with its lower top formation in the near term or negates by closing above the high of the week ended April 09, 2021. A conclusive breach below the horizontal support level of 14,250 can bring back selling pressure and drag the index lower towards 14,000, followed by 13,800 levels. On the other hand, a close above the high of the week ended April 09, 2021, would act as a green light for the bulls and in that case, the index might test the levels of 15,300-15,450 in the medium term.

The weekly RSI has made a new 14-period low and along with this, on the weekly chart, we had seen the RSI forming a descending triangle pattern. It has also breached this descending triangle pattern a couple of weeks back and went onto re-test the breakdown points of descending triangle pattern and slipped lower to make a new 14-period, which is negative.   

The coming week is also a truncated week where the main focus would be on the earnings and COVID cases. Long story short, one eye would be on the increasing number of COVID-19 cases while the other on corporate earnings!