NEW DELHI: The stock market rebounded strongly on Friday after being in the red for six straight sessions. While BSE Sensex closed 641 points higher at 49,858 points, the NSE Nifty 50 ended at 14,744. During the week, however, the benchmark equity indices fell nearly two per cent as a surge in Covid-19 cases and rising bond yields played a spoilsport. Although the break from bearish sentiment brought some level of optimism among investors, experts have warned that high levels of volatility is likely to continue in the market.
“The market may remain volatile in the near term given volatility in bond yields, concerns over the rising commodity prices and risk of increase in inflation. In addition, a resurgence of covid cases continues to worry the market and hence it may continue with its roller coaster ride,” said Siddhartha Khemka, head - retail research, Motilal Oswal Financial Services.
Echoing similar sentiments, Gaurav Garg, head of research, CapitalVia Global Research said that any further surge in Covid-19 cases and rise in the US ten-years bond yield may lead to a downfall of the market. “Despite some greater relative weakness seen over the past week, we recommend remaining cautious, avoiding leveraged exposure to either side and booking profits with any opportunity for the same,” he added.
According to Garg, 15,000 and 15,250 levels (NSE Nifty) will serve as key resistance, while the 14,500 and 14,250 levels will act as a support in the coming week. To curtail a likely second wave, states such as Punjab, Maharashtra, Madhya Pradesh and Tamil Nadu have announced restrictions, including lockdown. Rusmik Oza, executive vice-president, head of fundamental research, Kotak Securities said that fresh restrictions by many states are being taken negatively by investors impacting economy driven stocks. “Internationally, the Fed seems less concerned over the recent surge in bond yields,” she added.