Markets slip for fourth day in a row; what should investors do on Friday?

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Indian equity markets closed in the red for the fourth straight day. In Thursday’s session, Sensex gave up 164 points, or 0.31%, to end at 52,318, while the Nifty moved in a range of 88 points and fell below the crucial 15,700 level

Rising cases of the delta variant of Covid-19 across the globe and weak macro data dented investor’ sentiments.

India’s domestic factory orders and production contracted to an 11-month low in June as measures to contain the coronavirus put manufacturing into “reverse gear”. The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) slipped to 48.1 in June from 50.8 in May and 55.5 in April. This was, for the first time since July 2020, below the critical no-change mark of 50.

Markets however rewarded auto stocks as the June sales figures showed healthy year-on-year recovery. The Nifty Auto index ended 0.8% higher, the top sectoral gainer on the NSE. India VIX, however, eased nearly 2% to settle below the 13 level.

Among sectors, auto, FMCG, pharma and PSU bank ended in the green, while selling was seen in the energy, bank, metal, infra and IT names. BSE midcap ended marginally lower, while smallcap index was up 0.3%.

Bajaj Finserv, Gland Pharma, Shree Cements, Britannia Industries and Infosys were among the top losers on the Nifty. Top gainers were Dr Reddys Labs, Hindalco Industries, Bajaj Auto, Tata Motors and Sun Pharma.

Indian rupee extended the fall and trading 25 paise lower at 74.57 per dollar, amid selling trade seen in the domestic equity market.

Here’s how experts see markets trading on Friday

Ajit Mishra, VP – Research, Religare Broking

Markets traded lacklustre and ended marginally lower following subdued global cues. After the flat start, the benchmark traded range-bound till the end however the bias slightly on the negative side. Consequently, the Nifty index ended lower by 0.3% at 15,680 levels

Markets are closely eyeing the global indices for some signal as indications are mixed from the domestic front. Nifty has been hovering within the 15,450-15,900 zone for almost a month now and currently trading in the middle of the band. A breakdown below 15,650 would pave the way for a further slide towards the lower range. We feel it’s prudent to keep a check on positions and prefer defensive in the current scenario.

Manish Shah, Founder, www.Niftytriggers.com

For fourth day in a row Nifty closed with a red candle. We have not seen a range expansion candle in this four day decline as the daily range of the candles are just below the average. We interpret this as a time correction of April to June rally. The entire price action for the month of June can be considered as a rectangle which is trend continuation pattern.

Nifty is still at the support of a rising trendline and the pattern of higher highs and higher lows remains intact. Nifty is getting oversold. Support for Nifty is now at 15600-15625. What we need is a bullish candle stock pattern which would at least give a short term rally. What we need is a move above 15750 to propel Nifty towards 15900-15950.