Time to book profit? Here’s what experts say investors should do on Monday

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Benchmark equity indices managed to settle holiday-truncated last week in the green. The BSE Sensex closed 386.76 points, or 0.77%, up at 50,792 on March 12 against 50,405.32 on March 5. Likewise, the 50-share NSE Nifty index gained 92.85 points, or 0.62%, to 15,030.95. Domestic equity markets were closed on Thursday on account of Mahashivratri. The Indian equity market on Friday failed to hold on to its strong start as rising bond yield countered positive sentiments. The Nifty index dipped 143.85 points on March 12.  Market participants are advising investors to start keeping money off the table.

Going ahead, markets will first react to macroeconomic data viz IIP and CPI inflation, which came in after market hours on Friday. Next, WPI inflation is scheduled for March 15. Besides, updates on Covid-19 situation and related news will remain on participants’ radars.

In a double whammy for the economy, industrial production growth re-entered the negative territory by contracting by 1.6% in January, while retail inflation soared to a three-month high of 5.03% in February on costlier food items.

Here’s how experts believe the markets are likely to trade on Monday.

Manish Shah, Founder, Niftytriggers.com Nifty closed the last week with little progress. The pattern on the weekly charts is a shooting star as the wick on the top is twice the size of the real body. Despite strong international markets, Nifty has trouble moving above the previous swing high of 15,430. On the daily time scale, it was a long red candle below the resistance at 15,430 and this resistance holds. The resistance pushed the index lower for the day and for the week we see some bearishness creeping in Nifty.

One wonders if we are seeing a distribution happening at the top. If Nifty trades below 14,873 we could see a break below double top trend reversal pattern. This pattern is visible on lower time frames. A break below 14,873 and there could be a decline towards 14,676 and below that to 14,545. A break below 14,873 would be a sell signal. On the upsides, Nifty needs to trade above 15,450 if the rally has to continue. With a drop in momentum, it seems that there is a need to tighten stops or start taking  money off the table, at least partially.

Shrikant Chouhan, executive vice-president, Equity Technical Research at Kotak Securities

After opening on the high side on Friday, the market suddenly changed its mood and closed at the lowest point of the day and week. It was expected that bond yields would go up after the announcement of the passage of the stimulus bill but the pace was faster than expected, leading to crash landings in Indian markets.

Nifty/Sensex hit hard. With 15,431 and 52,561 levels not crossed, the Indian market has once again come to the lower support. The 14,850/50,150 could be a decisive support and if it breaks, the Nifty/Sensex could move closer to 14,650/49,500 or 14,500/49,000.

It seems difficult to get out of weakness immediately. However, if indices hold above 15,200/51,250 levels, we can see an upward activity.

Maintain a bullish bias on technology stocks. Nifty has formed the bearish hammer with a lower high formation in the weekly chart, it is advisable to reduce weak long positions at resistance levels. Buying is advisable in select companies on dips (14,500/49,000).