Nifty at 15,000: Should you stay bullish and look for opportunities?

The bears made a comeback on Dalal Street, reminding investors of last week's drubbing, when the markets opened for trade on Thursday as concerns over spike in bond yields rekindled. The domestic markets, in the first three sessions of this week, had managed to recoup all losses sustained in Friday's session and were eyeing the all-time high levels on the back of strong macroeconomic data and stabilisation of bond yields.

But come Thursday, the US bond yields which have become influential on stock prices, globally, spiked to 1.48 per cent, resulting in a 900-point crash on Sensex and a fall below the 15,000 mark for the Nifty. Meanwhile, in India, the yield on 10-year benchmark bond rose to 6.26 per cent, its highest level since April 2020.

"Markets are likely to be excessively volatile, globally as well as in India. Inflation is likely to rise, bond yields may again rise, though mildly and Fed will continue to be accommodative. Along with this, India Inc will continue to report good numbers while market valuations continue to remain elevated. This is the perfect setting for choppy markets," said Dr VK Vijaykumar, Chief Investment Strategist at Geojit Financial Services.

But, at the same time, he added this is the time to 'buy on dips' in the market as there is no way that the bond yields will go beyond 1.65-1.7 per cent, underscoring Fed Chairman Jerome Powell's testimony that the US central bank's accommodative stance and interest rates near zero will continue through 2023.

Powell, last week, insisted that the Fed will keep rates at the current level near zero until the economy reaches "maximum employment and inflation has risen to 2 per cent and is on track to moderately exceed 2 per cent for some time."

Amid this backdrop, capital outflows from emerging markets are unlikely to gather momentum, Vijaykumar pointed out.

Rather, this volatile period offers an opportunity for investors to pick stocks they have been waiting to buy, said Gaurav Dua, SVP, head - capital market strategy at Sharekhan. He believes that the opportunity seems ripe in the mid-cap and small-cap space than the main indices amid valuation comfort and strong economic recovery.

During the bouts of volatility in the market, the midcap index has been doing pretty well and shown resilience to the selloff in benchmark indices. On a year-to-date basis, the BSE Midcap and BSE Smallcap have outperformed BSE Sensex with the former adding 16 per cent each as against an 8 per cent rise in the latter.

So far, the stance of FIIs have been bullish as they ploughed in Rs 25,787 crore in the month of February post the Union Budget for FY22 and in the financial year 2021-22, net FPIs into equities stood at Rs 2.63 lakh crore, the highest ever FPI inflow into the country.

Technical outlook

S&P BSE SENSEX:  With sharp rise on March 3, 2021, the index posted a tremendous buying momentum, as per the daily chart. However, the sudden weakness in the opening trade on March 4, 2021 has dismantled the upside bias. That said, until the index does not breach 50,000 mark decisively, the upside bias may regain momentum. Meanwhile, the Relative Strength Index (RSI) needs to cross the resistance of 58 value, which has become a hurdle even when the price has indicated a firm up move. CLICK HERE FOR THE CHART
 
NIFTY50: The morning session on Thursday (March 4) saw the index retracing to the 15,000 mark. This level has become a decisive level for market participants as any breach may trigger shorting opportunities. Nevertheless, until the index manages to retrieve the buying momentum and absorb the selling pressure while defending the 15,000 mark, the reversal could rally towards 15, 200 levels.  Only a decisive breakdown with an “increased volume” below 15,000 may lead to more downside towards 14,900 levels. Secondly, if the RSI breaks out above the 60 mark, it may reinforce strength in the reversal momentum, as per the daily chart. CLICK HERE FOR THE CHART
 
NIFTYBANK:  Although, the index witnessed a sharp upside of over 900 points yesterday, it failed to cover the gap-down range of 37,232 – 34,658 levels. Likewise, the index has a trendline resistance of the RSI around 60 value, which the index failed to conquer. All these indicate a mild weakness. Having said that, the index is making constant efforts to cross significant resistances. Only a close below 35,200 may accelerate the selling pressure and the index may drop to 34,800 levels. If the index is able to sustain a move above 36,000 level, it may see a recovery towards the 36,400 mark. CLICK HERE FOR THE CHART