There's One Reason For A Dearth Of Upside Move In Market, Says Analyst
Equity markets lack upward momentum. Major correction possible if index falls below 21,900/800. Closing above 22,200 needed for market confidence.
A potential upside in Indian equity markets, which doesn't seem apparent at present, depends on certain conditions.
That's according to Soni Patnaik, assistant vice president at JM Financial Services Ltd., who said the markets can expect "some upward swing" if the Nifty closes above the 22,000 mark.
The NSE Nifty 50 fell 338 points, or by 1.51%, to close at 21,997.70 on Wednesday. This was the first time in March that the benchmark closed below the mark.
Patnaik said even after this fall, the index held on to the support of the 21,900/800 mark. "If the benchmark falls beyond this mark, then it can face a major correction," she told NDTV Profit.
If the index had closed above 22,100, it would have given the market confidence to surpass the 22,500 barrier, she said.
“…As long as the 21,900/800 band is getting defended, it may consolidate but there is not much of an upside been seen until and unless it doesn’t give the closing of above 22,200.”
Rupak De, senior technical analyst at LKP Securities Ltd., concurred.
"The Nifty has once again closed below the rising trendline, bringing market sentiment back into a state of weakness," he said. "The momentum indicator suggests bearish momentum in the near term."
On Friday, the benchmark ended 150.10 points lower, a 0.68% decline, at 21,996.55. The S&P BSE Sensex, too, fell in tandem. It dropped 453.85 points, or 0.62% lower, to close at 72,643.43.
New EV Policy Not To Affect Incumbents
Chakri Lokapriya, managing partner at RedStrawBerry LLP, said all listed automakers in India are unlikely to be affected by the Union government's new policy on electric vehicles.
According to this policy, a customs duty of 15% would be applicable on vehicles worth $35,000 (approximately Rs 29,01,400) and above for a total period of five years.
Manufacturers like Mahindra & Mahindra Ltd. and Maruti Suzuki India Ltd. have passenger vehicles, which are below the Rs 29,00,000 cutoff range, Lokapriya said.
Following the policy implementation, when domestic productivity will witness a boost in India, he also expects the auto ancillary industry to benefit from it.
