Archives April 2021

In a truncated week from 30’th Mar – 1’st Apr’21, Nifty closed at 14867. It is above the 20 day MA of 14820-14850 zone. It did the same on 30 Mar too but then the selling at higher levels dragged it lower. The important point to note is that bulls are still not giving up and every low has turned out to be a buying opportunity in last one year. The tussle in between bulls and bears of Nifty 50 continues.

With rising dollar index above 93 and US 10-year bond yields at 1.7%, I guess the market still wants to bet on earnings and inch up.

Our all-time highs on Nifty was closer to 15400-15500 levels.

With several attempts that were taken by market to cross all-time highs in last few weeks have failed, we are continuously making lower lows and lower highs.

Let’s wait and see the direction of index next week, when we will have full 5 days available.

Looking at fading momentum on the up side and various indicators like:

1. USDINR testing its resistance of 73.5-73.8 where in the expectation was of lower levels earlier.
2. Rising Covid cases and fresh stricter lockdowns.
3. Slower pace of vaccination.
4. Margins getting impacted because of high inflation.

 It will be a cautious watch and next strategy and action should be taken after watching certain key levels like 15100 on the upside and 14250 on lower side.

On a long-term basis, we are in a bull market in India but looking at the short term, we can be due for some correction.

As it will be a result season and month in April, earnings and valuation based Buy/Sell calls can be taken for long term investment.

Joe Biden announced a $2 trillion infrastructure package bolstering the much-needed revamp in US across ports, roads, etc. This will translate into a huge support to US and world economy

As per the observations and trends, the spent by US in last many years out of their budget in Infrastructure has been low and with the rise of china as an infrastructure and a manufacturing hub of the world, US turn was long awaited.

This was taken up by current US President, Joe Biden on 31’st Mar’21.

This is significantly positive for steel which is a ferrous metal. It is estimated that for every billion-dollar spent on infrastructure, proportionate requirement for steel is 50,000 ton.

Also looking at the current unemployment levels, infrastructure package also addresses it. Every trillion-dollar spent on infrastructure ends up creating 11 million jobs.

Going by the announcements, there will be a greater focus on energy and electrification too and it will be hugely positive for Nickel, Copper, Silver, etc.

Some of the plans are for 500 thousand new charging stations and similar number for conversion of school buses to zero emission. This will alone require close to 200 thousand tons of copper. Also, renewable sources of energy require an estimated 5 times more copper than conventional sources.

All in all, positive for base metals and steel.