HDFC Securities shares views on Nifty and economic measures announced by Modi government

HDFC Securities has shared its views on Nifty and economic measures announced by Modi government. The extension of the ECLGS (Emergency Credit Line Guarantee Scheme) to March 31, 2021 is welcome as the scheme has been useful for the MSMEs as seen by the offtake so far at Rs 205000 cr. However, the overall amount under the scheme likely remains capped at Rs 300,000 cr. Further outlay on the PMAY-Urban (Pradhan Mantri Awas Yojana - Urban) is also welcome. These are a series of multiple steps each of which is positive for the economy and together it could continue to support the economic revival.

After rising incessantly for eight consecutive sessions Indian markets consolidated its recent gains in today’s session. Nifty finished the day at 12693, about 0.5% lower. Banking stocks which were leading the bull charge also came under profit booking in today’s session, bank nifty closed almost 2% lower for the day.

The Centre has announced the Atmanirbhar Bharat Rozgar Yojana to incentivise the creation of new employment opportunities during the Covid-19 recovery phase. The finance minister also announced details about the Incentive Scheme (PLI) in the 10 key sectors. This scheme will make Indian manufacturers competitive globally and attract investment in the areas of core competency with cutting-edge technology. It will also ensure efficiencies, enhance exports and make India a pivotal part of the global supply chain.

After showing a sharp up-trend move in the last eight sessions, the upside momentum has halted in the market today and Nifty closed the day lower by 58 points, amidst a range movement. A small negative candle was formed with minor upper and lower shadow. Technically, this pattern indicates a formation of high wave-type patterns at the lows. This pattern doesn't have any significant predictive value.

After opening on a slightly negative note, the Nifty shifted into a range bound action with weak bias for the better part of Today's session. Minor upside recovery has emerged from the intraday lows in the later part and the market closed the day by erasing some of the intraday loss.

The formation of minor weakness with range bound action, post sharp trended up move of the last 7 sessions could be positive for the bulls to make a comeback. This pattern could indicate an inherent strength of a recent uptrend and lack of selling enthusiasm in the market at the new highs. Normally, such a pattern could eventually result in an upside breakout, after some more choppy movement.

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The market breadth was positive today despite weakness in the benchmark index. The broad market indices like midcap 100 and small cap 100 segments have ended on a positive note by registering gains of around 0.60% and 1.31% respectively. This is a positive indication.

Conclusion: Thursday's minor weakness has not changed the status of the near term positive trend of the market. There is a possibility of further 1-2 sessions of consolidation movement with minor weakness, before showing any upside breakout above 12770 levels. Immediate support is placed at 11580.