The Indian equity benchmarks fell for fifth week in a row on Friday with Nifty 50 index falling below its important psychological level of 16,000 and Sensex dropping a whopping over 2,000 points or 3.72 per cent. The sharp drop in the benchmarks came on the back of rising inflation which has ignited fears of aggressive rate hikes by central banks would hamper the global growth.
A drastic spike in inflation has forced central banks to hike interest rates reversing the interest rate cycle, which was at all-time lows. The Sensex and Nifty crashed by over 15 per cent from record highs hit in October. The current drop in benchmarks has sparked fears that India will verge into a bear market.
Meanwhile, the markets are expected to rebound from low levels going ahead as they have entered oversold zone on technical parameters, analysts said.
"The inflation concern and monetary tightening across the globe are key concerns for the equity markets. Equity markets are under the strong grip of bears however they look extremely oversold and due for a pullback rally," said Santosh Meena, head of research at Swastika Investmart.
Nifty and Bank Nifty Trading Strategy
Nifty is likely to go up to 16,180-16,400 levels during the week as all the technical parameters are in oversold zone and hint at a possible bounce. On the flipside, if Nifty falls below 15,670 then selling pressure will intensify which can take Nifty towards 15,500-15,000 levels, analysts said.
"If we look at the derivative data then FIIs' long exposure in index future stands at 24% and the put-call ratio is sitting at the 0.73 mark, both are in extremely oversold territory. Technically, the Nifty is trading near the previous swing low of 15,670 and most of the momentum indicators are trading in oversold territory, therefore, we can expect a bounce back towards 16,180/16,400 levels while if the Nifty slips below the 15,670 level then selling pressure may be intensified towards 15,500/15,000 levels," Meena said.
For Bank Nifty 33,000 is an important support level on the downside and a bounce back can be expected from that level, Meena added
"Below 33,000 level, 32,000 will be the next important support level. On the upside, 34,000/34,500/35,000 levels will act as important hurdles, for the Nifty Bank index", said Meena.
After successful initial public offering, Life Insurance Corporation of India will list its shares on stock exchanges on May 17. LIC listing will be closely watched by the stock markets participants as this will mark the listing of company which was the largest IPO of the country.
The government has fixed the issue price of LIC shares at Rs 949 apiece, the upper end of the IPO price band, fetching the exchequer around Rs 20,557 crore. LIC IPO closed on May 9 and shares were allocated to bidders on May 12. The government sold over 22.13 crore shares or 3.5 per cent stake in LIC through the IPO at a price band of Rs 902-949 a share.
The retail investors and eligible employees of LIC were offered a discount of Rs 45 per equity share over the issue price, while policyholders got a discount of Rs 60 per share.
As per the prospectus filed by LIC on May 12, the offer price of the share sale has been fixed at Rs 949 per equity share.
LIC policyholders and retail investors have got the shares at a price of Rs 889 and Rs 904 apiece, respectively.
Earnings, Economic Data To Watch
Avenue Supermarts, Century Ply, Glaxo Smithkline, DLF, Indoco Remedies, Indian Oil, IRB Infra, Nocil, Aditya Birla Fashion, Granuels India, InterGlobe Aviation, ITC, LIC Housing Finance, Lupin, RBL Bank, Ashok Leyland, Bosch, Chambal Fertilisers, Dr Reddy's Labs and IRB Infra are some of the prominent companies that will report their March quarter earnings during the week.
On May 17, government will report wholesale inflation data.