Spooked by a global sell-off triggered by prospects of a trade war and rally in crude oil prices, markets closed on a weak note during the week ended.
Falling to their lowest levels since October 2017, Sensex and Nifty closed 579 points and 197 points lower at 32,595 and 9,998 respectively.
Mirroring the weakness and fear in the broader markets, the S&P BSE mid-cap fell 525.02 points or 3.24 per cent to settle at 15,694.11 while S&P BSE small-cap index fell 775.26 points or 4.41 per cent to settle at 16,801.18.
Sentiment on Indian equities has also soured recently on the prospects of the ruling party in a spate of state polls this year and general elections in 2019.
The last time the indices had a retreat of similar magnitude from peak to trough was in late 2016 during demonetisation times.
True to predictions, after the US and China have fired the opening shots of what could become a trade war, jitters were seen globally. A full-blown trade war would have much more profound economic implications for both the US and China. It would also drag down global trade and put vulnerable economies under pressure.
Near term trend will be dictated by F&O settlement, macro data, trends in global markets, FII and DII activity, the movement of rupee against the dollar and crude prices.
Markets will remain shut on Thursday and Friday on account of Mahavir Jayanti and Good Friday, respectively. For the week ahead, chartists predict trading range of 32,000-33,000 and 9,800-10,175 for indices.
Stock Scann
Indag Rubber is a tread manufacturing company. The company is engaged in the manufacturing of the Precured Tread Rubber, Bonding Repair and Extrusion Gum, and Rubber Cement, which are used for retreading of tires. The company’s manufacturing plant is located at Nalagarh (Himachal Pradesh) As industrial activity picks up, more demand for commercial vehicles for movement of goods will improve retreading business of Tires. Buy on declines for target price of Rs 250.
Newly listed PSU Bharat Dynamics designs and manufactures under water guided weapon systems. Strong order book and good visibility of earnings make the stock good buy in present weakness for long term gains.
F&O
Ahead of settlement and holiday-laced week, derivative segment witnessed brisk trading. Sentiment indicators like open interest, implied volatility, VIX and put/call ratio suggest further fall from the current levels in near term. Trading could be volatile on the back of roll over of positions in the F&O segment from the near month March 2018 series to April 2018 series.
The near-term trend of Nifty is weak, and expect a sharp downside breakout of key supports pull down Nifty to 9,750-9,800 levels. Use relief rallies to reduce positions.
Fears of an escalating trade war triggered fresh selling in metal counters. Donald Trump had signed off on tariffs on steel and aluminum imports, although several countries were exempt.
Markets are worried that subsequent retaliatory actions could result in a trade war. Contrarians suggest buying in Tata Steel and Vedanta in the present weakness.
