How new Maharashtra restrictions may impact Sensex, Nifty

Stock Market Outlook: After imposition of Section 144 leading to huge restrictions in regular public life in Maharashtra, the speculation is rife that it will have an impact on the Indian indices when it opens on Thursday. However, if we go by the experts' view, Indian share market has already discounted on Monday on the Maharashtra lockdown speculation and hence there are lesser chances of further crash in the markets. They said that in the next fortnight, number of COVID-19 cases getting reported in India will be a big trigger inside India the US market performance will be an important overseas factor.

Speaking on Maharashtra restrictions' impact on Dalal Street; Sumeet Bagadia, Executive Director at Choice Broking said, "There is no such restrictions being announced by the Maharashtra Government except Section 144. Most of the restrictions under Section 144 have already been imposed in Maharashtra around 10 days ago. In fact, the market has already discounted the Maharashtra lockdown news on Black Monday when it shed more than 1700 points. So, in my opinion, NSE Nifty is expected to maintain its current support of 14,250 to 14,300." Bagadia went on to add that Bank Nifty will also looks able to maintain its current support of 30,700.

Important domestic trigger

On major triggers that will decide the market outlook; Avinash Gorakshkar, Head of Research at Profitmart Securities said, "Rather looking at Maharashtra restrictions, one should look at the number of new COVID-19 cases getting reported from now onward. If the new cases goes on to rise then it will definitely have a negative impact on the markets." Gorakshkar said that one should keep following stock specific trade instead of index trade. Pharma and IT stocks are expected to outperform other sectors in case the number of COVID-19 cases keeps on rising. He advised investors to look at shares like Dr Reddy's, Gland Pharma and Cadila Healthcare in pharma sector while Infosys, TCS and Tech Mahindra in the IT sector.

US stock market holds key

Suggesting stock market traders and investors to keep an eye on the US markets Sumeet Bagadia of Choice Broking said, "Much will depend on how the US market performs on Wednesday. If the US market closes in green zone, then we can expect positive opening at Dalal Street on Thursday." SGX Nifty is currently trading around 200 points (at 2:00 PM Indian Standard Time) up from its Tuesday close.

Asked if the COVID-19 cases continue to rise in near future Sumeet Bagadia said, "Covid-19 update in India and the US market performance will remain the major triggers for Indian stock market. If the Government of India (GoI) manages to contain the new COVID-19 cases, then we can see Nifty breaking the upper resistance of 14,800 to 14,900 levels and scaling 500-600 points above this resistance. Similarly, at Bank Nifty, we can witness 1,000 to 1,500 points rally if there is improvement in the number of new COVID-19 cases."

However, Bagadia said that if the COVID situation further worsens, then we may see Nifty and Bank Nifty breaking its current support. He said that in that case, NSE Nifty may dip by around 500-600 points below its current support while Bank Nifty may further slide up to 1,500 points from its current support.