Stock market volatility likely to continue

K. ARAVIND

Last week, the stock market started with a sell-off. Reliance Industries’ performance on July 31 was good, but it did not deter the stock market from falling on August 3. Reliance has not been able to hold on its own in the stock market despite its strong performance.

 

The strong selling pressure on the first day of last week was mainly due to the trends in global markets. The Nifty fell to 10,882 points on August 3 but then rebounded. Investors have shown interest in buying banking stocks, including HDFC Bank. The Nifty rose again to above 11,200.

 

The Reserve Bank’s policy announcement has been a source of excitement for the market. Although the base rate has not been reduced, the market has taken a positive approach with the approach to increasing the availability of funds. Although there were rumors that there would be a move to extend the moratorium on loans, the Reserve Bank’s failure to make any such announcement benefited banking and finance stocks.

The announcement of a one-time loan restructuring was also a stimulus to the market. The market was able to make up for the initial loss and close with a gain this week.

 

The high number of COVID patients and the floods are the factors that are adversely affecting the market. The good monsoon had earlier served as a favourable factor for the market. However, heavy rains in many states have led to floods, raising fears of crop failure. If that happens, the hope that the rural economy will recover would set. At the same time, the rapid progress of the vaccine trial against COVID and the liquidity are positive factors for the market.

 

The availability of funds has kept the market afloat. The volatility is likely to continue into next week. 11,377 is the pressure point of the Nifty. If it breaks through, the next pressure point is at 11,550. The Nifty is supported at 10,800. It is likely to trade within this range next week as well.