Facts have proved that the second wave of COVID-19 is more dangerous, with more than 3,00,000 coronavirus cases reported in India every day. The market has been undergoing major adjustments due to the increase in cases, similar lockdown-like measures, and strict restrictions imposed by the states.
Axis Securities has lowered its Nifty’s December target by 6%, from 17,200 to 16,100. After facing the challenges of COVID-19, the government has begun to actively take measures to open up the immunization program, starting from May 1, 2021, to cover a wider age group from 18 to 45 years old. What is clear is that coronavirus may be overcome within a limited time of the next 6 months. In this case, Naveen Kulkarni, A CIO (Chief Investment Officer) of Axis Securities stated: It is important to assess the damage caused by the second wave of COVID on various industries and corporate earnings because these factors have the most serious impact on market returns and valuations.
Based on a sensitivity analysis of the spread of the virus and the duration of the lockdown, Kulkarni estimates that in a bearish scenario, Nifty 50’s FY22 revenue will fall by 6-16%. This means that the income in fiscal year 22 may be between 575 and 650, which still means that the level of fiscal year 21 has increased. The brokerage firm said: Although this is not a doomsday scenario, it does show that some sectors will perform poorly in the short to medium term, while others will outperform the broader market.
Discretionary Consumption & Autos To Be Severely Impacted
The state of Maharashtra, which accounts for 14% of India’s GDP, announced the strictest measures because the state has the largest number of cases. As a result, sectors related to restaurants, small tickets discretionary, travel, tourism, and many other industries will be severely affected.
The brokerage company believes that although there are not many listed companies in small ticket discretionary consumption such as restaurants since this is a lender in the SME and MSME fields, all of these will affect the BFSI industry. Similarly, the automotive industry is expected to bear the brunt of closed showrooms and low capacity utilization. The profitability of the automotive industry may be under pressure in 2021.
Information Technology, Consumer Staples, Pharma & Rural Set To Outperform
As the digitalization strategy adopted by Indian companies accelerates, IT departments will not be affected by domestic challenges. A stronger dollar will also benefit the industry. In the process of continuing vaccination and launching more COVID-19 vaccines, the pharmaceutical industry may outperform the market and benefit from domestic challenges, and achieve profitable growth in the next three months.
The brokerage company added: Dr. Reddy and Gland Pharmaceuticals may benefit from the recent government-approved roll-out of Sputnik. Naveen Kulkarni also believes that as food companies are positively affected, the growth trajectory of major consumer staples may also maintain constant. In addition to this, rural areas will continue to be in good condition, because the last cycle also showed that the impact of the pandemic is lower than that of urban areas.
Nifty December Target Is Seen At 16,100
In the second wave of COVID-19 in the world, metal prices continued to soar. Similarly, other commodities also continue to rise. The domestic brokerage firm also said that even though cyclical activities such as cement and capital goods may disrupt demand intermittently, the possibility of a surge in demand after a pandemic is still high. In these challenges, it believes that cyclical space also performs well.
Axis Securities pointed out that the impact on the market will be huge, but there are enough structural factors to provide long-term earnings visibility. These should accumulate during the current fall because they will bring strong earnings growth and may see higher distributions in the short term. It appended: We remain cautiously optimistic about the stock market and believe this is an increase in time, not a panic.
Sensex, Nifty Rebound & End With Gains? Are The Bulls Gearing Up For A Comeback?
The stock market closed with gains on Thursday and recovered after opening losses. S&P BSE Sensex closed up with 374 points to 48,080, while 50-stock NSE Nifty closed at 14,406. Bank stocks fell from their lows, and ICICI Bank rose 3.6%, ending Sensex’s biggest gainer followed by Bajaj Auto, HDFC, Hindustan Unilever, Titan, and Asian Paint which are the most-watched stocks. Volatility rose slightly and closed above the 23 levels. Nifty Bank is the biggest gainer in the industry.
The Head Of Research At LKP Securities, S Ranganathan, Stated–
In a turbulent session, although the country recorded the highest daily COVID-19 gains, the market closed on Thursday with a positive note as investors focused on a broad vaccination program. In today’s trade, Steel Stocks once again expressed the determined determination which is the key highlight.
Head Of Research At Geojit Financial Services, Vinod Nair, Said –
With the increasing number of covid-19 cases, the domestic market has recovered from its early losses, thanks to the positive hints of the global market. Although optimistic due to the promotion of vaccination, as the number of consecutive cases increases, the market has entered the correction phase. Although it is expected that the earnings results in the next few days will have stock-specific changes, the wide-ranging changes in the market will depend on the decline in coronavirus cases.
Proprietary Index Trader And Technical Analyst At Deen Dayal Investments, Manish Hathiramani, Stated –
The market failed to break today’s low of 14130, and climbed upwards, closing above 14400. Unless we do not break today’s low and stay below it for a few hours, the market will not enter a bear market. If we successfully break the low, we should be able to fall to 13,800. The upside is capped to only 14,550.
The Head, PMS & Advisory At Hem Securities, Mohit Nigam, Said –
Today the market is still turbulent, swinging between red and green; today’s financial sector has seen some recovery, leading to a 0.5% increase in the market’s closing. However, the market’s stability and elasticity are less stable, and it has been carried out again near the 14,200 level which tests and rebounds around this level regularly. In the absence of new positive development, we may not have a bullish momentum for the time being, and the volatility will continue. On the downside, 14200 is still the key support.
Manish Shah, Founder of Niftytriggers.com, Said –
Today’s pattern is a bullish piercing pattern, and today’s pattern was previously a bullish hammer on Monday. This is a bullish development because buyers are gathering in a very important support area. 14300-14250 is support for Nifty, Nifty fell Breaking the support level, the market has recovered and closed above the support zone. If Nifty breaks through the resistance level 14550-14560 and expects it to rise next week, it will become the expiration week of April, in the next 2- within 3 trading days, we can expect Nifty to reach 14650-14680. If Nifty breaks through 14700, it is expected to rise further to 14900. Support for Nifty is at 14200, and within the expiration week, the probability is favorable for Nifty to rise to 14680 and beyond high.