Eyes On The Second Round Of Stimulus To Propel Sentiments
Jesse Livermore, one of the greatest trader of all times, has quoted, “There is time to go long, time to go short and time to go fishing.” After having rebounded sharply from the panic low, underpinned by trillion dollars’ worth of stimulus packages that was announced by central banks as well as the flattening of curve by the number of Coronavirus cases in the worst-affected nations, the markets seems to be in an indecisive mode as it has been moving in a broad range. This is quite a common phenomena after a swift move, where prices tend to move in a sideways manner i.e. a period of rest before taking the next big leap.
The market participants had anticipated the economic data of being a grim one but after coming face to face with the grisly reality, the bulls went for a tailspin on Wednesday. In US, March retail sales shrunk to 8.7 per cent and US industrial production fell 5.4 per cent; the steepest decline since the early 1946. In India, India’s merchandise exports fell to 61-month low at 34.6 per cent to $21.41 billion in March in comparison to the previous year while, the imports were down by 28.7 per cent to $31.16 billion during the same period.
Had Coronavirus been completely out of the current scenario, D-Street would be full of activity and buzzing as Q4 and FY20 earnings started to flow. Q4FY20 was one of the most-eagerly awaited events of D-Street as many analysts and market participants would have been all ears to earnings announcement and management guidance. However, contrary to this, the present scene is such that due to COVID-19 pandemic, Wipro announced its quarterly earnings on Wednesday but suspended its practice of providing quarterly guidance. In short, Q4FY20 earning season is somewhat like an examination hall, where before entering, students know that they are not going to secure even the passing marks as all the questions have been set out of syllabus. As every analyst and market participants knows beforehand that in this chaos, the entire month of March has almost been a washout and there is not much, which one could anticipate from earnings. However, one sector that would still grab attention of the market participants is the piped piper of last bull-run, the banking & financial sector. This sector has been one of the worst hit in the recent fall due to the slow systemic credit growth and the cascading impact of the lockdown made it even worse.
Amid this gloom and doom scenario, according to IMD’s forecast released recently, Indian monsoon rains are likely to be normal this year at 100 per cent of long period average. Forecast of the monsoons to be normal comes as a much-needed solace in the current virus depressed economy.
Currently, the trend of the markets seems to be rangebound but the volatility continues in this stipulated range bound move as well. Technically, Nifty seems to have formed a temporary top at 9,261 level. Unless it manages to cross this level, we could see some more weakness in the markets with 8,800 being the next support level. However, the stock specific interest is likely to continue in the market and the sole guiding factor for the markets would be the news flow from Coronavirus front. At the same time, the market participants are eyeing any announcement with regards to the second round of stimulus package from the government, which could help lift the market sentiments and provide the much-needed gush for this breakout.
