Lockdown fears, rising Covid cases weigh on sentiments. Here’s what investors should do on Thursday

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A strong start to the day was sold into, as benchmark indices settled 0.5% lower on Tuesday on what first appeared to be a promising day for the market.

A sharp sell-off in the fag-end of the session engulfed the markets as the benchmark index Sensex fell over 750 points from the day’s high and ended the day around 47,700 level, down 244 points. Nifty lost 0.5% to close below 14,300.

News around fresh restrictions dented sentiments. While Maharashtra tightened Covid-19-related curbs, allowing shops to stay open only between 7 AM and 11 AM, the eastern state of Jharkhand announced a complete lockdown for a week, starting today.

The broader markets, on the other hand, managed to duck the bear onslaught and supported the overall market breadth. The S&P BSE MidCap and SmallCap indices gained 0.5% each.

Among stocks, UltraTech Cement plunged%; IT firms HCL Tech and TechM fell up to 4%. HDFC twins declined up to 3%. FMCG majors ITC and HUL ended over 1% lower. Select auto stocks such as Maruti, Bajaj Auto and M&M rose 2% each. Bajaj Finserv climbed 4% while Bajaj Finance added 3 per cent. L&T gained 2%.

Everest Kanto Cylinder, meanwhile, hit an over 10-year high of Rs 110.7, soaring 20% on the BSE in the intra-day. he stock was trading higher for the fifth straight day, having rallied 44 per cent alone in the past two trading days. Given the acute shortage of oxygen cylinders amid rising Covid-19 cases in India, the company is expected to see a surge in demand in its medical equipment segment.

As the rise in Covid cases continues to worry investors, analysts are getting cautious on a further sell-off in markets.  Credit Suisse Wealth Management India in its latest report has said that Indian equity markets could see some further profit booking in coming weeks.

Here’s how experts see markets trading on April 22

Rohit Singre, Senior Technical Analyst at LKP Securities

The index has base around 14200-14250 zone if managed to sustain then some pullback possible if not saved then we may see next leg of a move towards 14000 marks which is another strong support on the downside, on the higher side 14400-14500 will be stiff hurdle also can be considered as initial profit booking levels.

Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing a sharp weakness on Monday, Nifty witnessed lack of strength to sustain the intraday highs on Tuesday. The weakness got intensified in the mid to later part and Nifty able to show minor upside recovery from near the support of 14,200 towards the end.

The Nifty has been showing lack of strength to sustain the highs recently and we observe a formation of consistent lower highs and repeated testing of lower 14,200 supports. After showing upside bounces from the lower supports for few occasions, Nifty is now placed at the edge of decisive downside breakout of the lower support as well as the range movement of the last one month.

As per the present high low range, a sustainable move below 14150 levels is expected to open a broad based weakness in the market and the potential downside target of the range theory to be watched around 13500 levels.

The chances of downside breakout seems higher. A decisive below the support is likely to drag Nifty down to 13500 levels in a quick period of time. Any upside bounce from here could find strong resistance around 14370.