Lack of Direction in Indian Stock Indices

The week which ended on 19 March’2021 has increased the confusion amongst traders, invetors and every stakeholder in equity market. There is a clear lack of direction in Indian stock indices.

Nifty 50 opened at 14900 on 15 and closed at 14745 on 19’th Mar’2021. This suggests that on a weekly basis, there was only a dip of close to 125points, but the low point of the week was 14350 breaking the previous low of 14500. There was short covering and buying at lower levels which made nifty climb 400 points from day’s low.

Overall, in my opinion and perspective, the trend from short to medium term is down. This being said, long term trend is still up and i would say that the current bull market in India can rush up to 21k in the coming years. However in the short term, it can correct upto 10-11k too. This is coming from valuations which factor in almost perfect execution by companies and almost no risk at all.

US 10 year bond yields is the X-factor in the short term. They are currently at 1.7 and higher they go, higher is the risk aversion and lower valuations for growth stocks.

Hence for the week starting 22 Mar’21, keep an eye on 14350. If this breaks, there can be further affirmation of the downturn.