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Friends, buy on declines would be the prudent strategy as possibility of profit booking at higher levels cannot be ruled out which would offer incremental buying opportunity to ride next leg of up move….

Dear Trader…

On Friday, the stock market indices staged a smart recovery as the rally was led by private sector Healthcare, Utilities, AUTO and Power stocks. The Sensex closed 28 points higher at 48,832, still short of its psychological 50,000 levels. This is commendable since the index had touched a day-low of 48,694 after India reported a record spike of over 2 lakh cases on Friday.

Key gauges started the day slightly in green but soon entered into red terrain as Maharashtra announced lockdown-like stricter restrictions amid a continued spike in COVID cases. Rising coronavirus cases weighted down on the markets. Breaking all records, India registered its biggest-ever single day spike with 216,850 fresh cases.

Nifty futures opened at 14605.65 points against the previous close of 14592.00 and opened at a low of 14582.25 points. Nifty Future closed with an average movement of 151.10 points and a rise of around 32.30 points and 14624.30 points .. !!!

On the NSE, the midcap 100 index will rise 0.98% and smallcap 100 index is closing rise 1.13%. Speaking of various sectoral indices, the NSE saw only sell-off in bank, financial services and realty stocks, while all other sectoral indices closed higher.

At the start of intra-day trading, june gold opened at Rs.47099, fell from a high of Rs.47223 points to a low of Rs.46820, with a rise of 30 points, a trend of around Rs.47205 and May Silver opened at Rs.68400, fell from a high of Rs.68823 points to a low of Rs.67990, with a rise of 210 points, a trend of around Rs.68750..!!

Indian exports for the month of March 2021 jumped 60.3% to $34.45 billion, on the back of an Agri-export push. However, outbound shipments for the full fiscal year 2020-21 contracted 7.26% to $290.63 billion.

The import growth also kept pace growing 53.3% to $48.38 billion for the month of March 2021. However, for the full fiscal FY21, the total imports were lower by 18% at $389.18 billion. The actual trade deficit widened to $13.93 billion in Mar-21 but full-year trade deficit for FY21 was down 39% at $98.56 billion.

The Nifty valuations appear to be stretched and the required earnings growth to sustain valuations is fairly high. Hence, any negative development or adverse news flow might lead to a sharp selloff. As the market has been in the overbought zone for a long time, it will not take long for the scenario to become difficult to sell again in a sudden correction. So that caution will be necessary.

Friends, buy on declines would be the prudent strategy as possibility of profit booking at higher levels cannot be ruled out which would offer incremental buying opportunity to ride next leg of up move.

Technically, the important key resistances are placed at 14676 levels, which could offer for the market on the higher side. Sustainability above this zone would signal opens the door for a directional up move with immediate resistances seen at 14737 – 14808 levels. Immediate support is placed at 14474 – 14404 levels.

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