An optimist will see the market successfully holding up at the current level and the rally sustaining after hitting a low of around 7,500 last month; partial lifting of lockdown and the flattening of COVID-19 infections curve across the country.

A pessimist also has an equally strong case. Every minor intraday rally is getting sold into. At the same time, there are no major expectations from the relief package being prepared by the government. The expiry of contracts is close for the month of April and foreign investors (FIIs) continue to remain elusive from Indian equities.

For the record, in today's session, the market put investors through a roller coaster ride of emotions. It slipped from the top and jumped from the bottom, never offering a dull moment through the course of the day, closing as flat as it can get, in the end.

Sensex closed 0.19% up at 31,648.00 while Nifty lost 0.05% at 9,261.85. The broader market continued to have a good run with the mid-cap index gaining 0.51% and small caps closed 0.36% up. Tata Motors (up 4.68%), Infosys (up 3.90%) and HDFC Bank (up 3.80%) were the major gainers while Shriram Transport (down 14.59%), (down 11.81%) and PVR (down 8.47%) were the major losers.

An earnings season full of pitfalls:

With lockdown impacting ~65% of the economy, The 4th quarter of financial year 2020 is expected to be a washout quarter for India Inc. With manufacturing at a standstill Auto, Oil and Gas and Metal sectors are going to feel the worst impact.

These cyclical sectors are likely to see more 25-35% cut in their earnings. Consumer, Private Banks and healthcare are expected to be the key out-performers this quarter.

Overall, all the key matrices are expected to post multi-quarter low growth figures; demand is likely to record double-digit decline for Nifty stocks.

Key takeaways:

Nifty sales are estimated to decline by 10% since last year, while Profit after tax is tipped to decrease by 20% since last year in the 4th quarter of the financial year 2020.

Did the RBI miss a trick?

RBI's new policy tweaks to infuse fresh liquidity has met with many apprehensions. A major draw here is the central bank's lack of willingness to buy out the bonds from smaller NBFCs; instead, it assigned dirty work to the banks.

The move (had RBI opted to subscribe to these bonds itself) in line with the Federal Reserve's decision, could have been a historic one and a big confidence booster. Alas, RBI's moment under the sun has passed by.

Key takeaways:

Only the time will tell whether RBI has missed a trick here or saved the ammunition for later stages? Let's keep that discussion for another time, after all, it's a long battle ahead.

Teji Picks of the day

HDFC Bank

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