Sensex, Nifty settle 1% lower this week; here’s what to expect from markets in coming week

After posting gains for two consecutive weeks, Indian share market benchmarks Sensex and Nifty ended the week one per cent lower. In Friday’s session, headline indices witnessed an excellent upside bounce after opening lower and recorded the biggest intraday gain in more than 2 months with BSE Sensex surging 1,432 points and the broader Nifty 50 index 429 points from day’s low. Broader markets also participated in yesterday’s gains, as their sectoral indices on BSE closed 0.96 per cent and 0.13 per cent higher. During the week, bears made a comeback as US Fed chair Jerome Powell decided to keep the interest at nearly zero. The Federal Reserve projected a grim outlook for the US economy and said that the virus poses a great threat. It projected that the US economy will shrink 6.5% in 2020. “Currently, Markets seem to be driven by global cues and stock-specific action will be the norm,” Vinod Nair, Head of Research at Geojit Financial Services.

Investors wealth erodes by Rs 2 lakh crore: At the start of the week, investor wealth stood at Rs 136 lakh crore. With so much volatility during the week, the BSE’s market capitalisation plunged by Rs 2 lakh crore to sit at Rs 134 lakh crore at the end of the Friday’s trading session.

Reliance Industries top contributor: The major contributor to yesterday’s gain was Reliance Industries. The gains in the stock price was supported by technical bullishness, says Vinod Nair, Head of Research at Geojit Financial Services. RIL share price jumped 3.34 per cent to close the session at Rs 1,588 apiece on BSE.

IT stocks capped the gains: Nifty IT was the top sectoral loser, down 1.5 per cent dragged by Tech Mahindra, Wipro and NIIT Tech. The biggest losers on Nifty were ZEEL, ONGC, Tech Mahindra, Power Grid and Wipro, down by 4.46%, 3.39%, 3.07%, 2.92% and 2.25%, respectively.

Technical outlook: Nifty opened on a sharp weak note on Friday amid weak global cues. But after the positive opening of the European markets, it jumped over 400 points from day’s low to end higher. “Prices have reversed from a 61.8% Fibonacci extension of the first up leg which also coincides with 30 week EMA and forms a bearish cloud cover candlestick pattern on a weekly chart,” said Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote.

Market outlook for next week: Sensex and Nifty settled nearly one per cent lower this week amid volatility. “In the weeks to come, markets are likely to remain under pressure and VIX is likely to rise which will determine the speed of the market movement. However, US VIX is currently at much higher levels of 40-41 which implies that fear factor is again rising for the US markets after a terrific come back. Results from major PSU banks are awaited but they are also expected to somber the mood of the markets. We recommend investors to preserve cash and not to jump the gun in this phony rally and wait for markets to correct. Nifty50 closed the week at 9972.9, down by 1.7%,” Jimeet Modi said.