During this period, the FII's have shed a lot of flab and their selling has been easily absorbed by domestic investors - institutional and retail investors. Therefore, except for some catastrophic events, the market is likely to move firm footed with regular corrections setting-in in between on hopes of a quick turnaround from the national lockdown.
Coming to the specifics, the Nifty made a 4-month high at 10,802.70 on (13/7) and is likely to peak out b/w 11,000 & 11,250. The momentum indicators are also nearing the top of the band and are signaling that the market has hotted-up and moved into an overvalued zone. Normally, the Nifty derives it's strength from the Bank Nifty but, at this moment, the bank Nifty is correcting in the last few trading sessions - this divergence b/w Nifty and Bank Nifty is another indicator that we are at the fag-end of the current rally. The Nifty's strength is now mainly derived from RIL, IT and Telecom sectors, which are least affected by the COVID lockdown from March '20.
The Nifty gets strong supports at 10,000, 9,540 & 8,800. However, it's too early days to say up to what level the market will catapult but I feel the support around 9,000 area in the Nifty will be a a hard nut to crack. While the Nifty itself may not go below 7511, certain sectoral indices (mainly PSU bank index) may seek lower levels hit hard by the lockdown. There is abundant liquidity in the system which will chase value. While many have missed buying at lower levels in March and subsequently, in May '20, they should take courage to buy good stocks which have a good product portfolio, low to zero debt and committed management during the next phase of correction.
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