Permission to global vaccines helps market recover. What should investors do now?
The Sensex & Nifty regained 40% of yesterday's losses led by a broad based buying in the last hour
Indian equity indices, Sensex and Nifty ended higher supported by last hour buying. The Sensex & Nifty regained 40% of yesterday’s losses while the Nifty Bank recovered 60% of yesterday’s losses.
The Sensex rallied 660.68 points, or 1.38% to end at 48,544, while the Nifty closed 194 points, or 1.36% higher at 14,504. Broader markets also supported the rally, with the midcap and smallcap indices ending over 1% higher each.
Barring IT and pharma, all other sectoral indices ended in the green. Strong gains were seen in banks, auto and metal stocks. The Nifty PSU Bank and Nifty Auto gained over 4% each.
Among stocks on the Nifty50, M&M, Bajaj Finserv, Tata Motors, Bajaj Finance and Maruti Suzuki were the top gainers, while Dr Reddy’s Laboratories, TCS, Tech Mahindra, Wipro and HCL Technologies were the top losers.
Markets will remain shut tomorrow on account of Dr. Baba Saheb Ambedkar Jayanti.
Here’s what experts say investors should do on Thursday
Ruchit Jain, Senior Analyst, Angel Broking:
We have already seen a week full of action in a couple of sessions with indices showing sharp swings on both the days. Nifty breached its short term support yesterday, but it reclaimed the 14500 mark at close today.
The sharp recovery certainly seems enticing, but still we advise not to get carried away as we may still not be out of the woods. The bearish gap area and the ‘20-day exponential moving average’ at 14650-14700 remains a sturdy wall which could be difficult to surpass immediately.
On the flipside, the ‘89 DEMA’ has played its role well as of now as Nifty did not breach that and yesterday’s low almost coincides with that support. With above-mentioned levels on the tab, traders should look to lighten up longs on pullback as the index approaches its resistance zone.
Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities
Nifty broke a critical level of 14400 and is now expected to witness extended consolidation or a possible correction. The next few trading sessions are expected to witness high volatility. On the downside, 14,000 can be tested if selling pressure continues.
For investors we advise to remain buyer on dips as the medium term outlook remains positive; Leveraged traders are advised to keep exposure under check as volatility remains elevated.
Mohit Nigam, Head, PMS & Advisory, Hem Securities
After the short-term panic on Monday due to a record increase in Covid cases, today’s upswing was testimony of the volatility that will continue in the markets for the next 2-3 weeks till we see relief in terms of number of cases due to faster vaccine rollout.
Investors will continue to add good quality stocks on any correction that will provide support and overall trajectory to the market. Meanwhile, TCS quarterly earnings has hinted at a strong IT sector results coming up for other companies in the just concluded quarter.
Technically, downside support for Nifty is 14,200 and if it breaches that level then we may see a sharp 500-700 points fall in the benchmark index while resistance is seen at 14,900 points.
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