Beaten down sectors may get traction next week, but weakness in banks to continue

The week was marked by surging cases of the Omicron variant across the world. Many countries increased curbs on movement while some Indian states also announced night curfew.

Realty and IT stocks were the darlings of investors throughout the week. A plunging rupee and stellar numbers from Accenture have made IT stocks more attractive while real estate sectors are in a structural rally.

“Markets will continue to see volatility and whipsaw-like movements as they respond to Omicron-related development and the monthly expiry,” said Yesha Shah, Head of Equity Research, Samco Securities.

“The week may see sectoral rotation, with beaten-down industries gaining traction. Because the underlying tone in Realty and Auto is optimistic, a purchase on dips approach can be used. Banks on the other hand, remain weak and are unlikely to see significant buying until the end of the year,” Shah said.

Among the next week’s events will be the expiry of Nifty December contracts. The rollover data for the next series will be crucial and a trader can gauge how the market may behave in the new year.

Ajit Mishra, VP – Research, Religare Broking said markets are closely eyeing the Covid-19 situation and any positive news could only help the index to make any sustainable up move else volatility will continue.

“Interestingly, we’re seeing a mixed trend across sectors so traders should focus on IT, select FMCG, pharma for long trades while the banking pack may continue to trade subdued,” he echoed Shah’s opinion.

Technical analysis of weekly and daily charts also indicate the continuation of consolidation.

Chandan Taparia, a technical analyst with Motilal Oswal said that the bullish candle on the weekly scale has a long lower shadow, indicating buying was seen at declines but hurdles are intact at higher levels. For him, a Nifty50 hold above 17,000 is a must for an up move towards 17,200 and 17,350. He sees support at 16,900.