Dalal Street Corner: Auto stocks lead market recovery as Sensex, Nifty snap 5-day losing streak; what should investors do on Thursday?

Snapping a five-day declining trend, the benchmark indices Sensex and Nifty50 closed over 1 per cent higher, while the broader markets mid and small cap closed mixed. The former was up 0.7 per cent, the latter was down 0.2 per cent on Wednesday.  

Of the 50 scrips on Nifty, 38 advanced and 12 declined at the close. Auto stocks lifted the markets most. Tata Motors, Eicher Motors, and Maruti Suzuki were among the top 5 gainers and each surged between 3.5 and 4 per cent. While oil marketing firm BPCL became the top gainer on Nifty, up over 4 per cent.  

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On the contrary, the Bajaj twins – Bajaj Finance and Bajaj Finserv closed as the top losers, each down between 1-3 per cent, followed by ICICI Bank down over 1 per cent on the NSE. 

On the sectoral front, banking, financials, metals, and media witnessed selling pressure marginally, while the Auto FMCG, IT, and Pharma aided the benchmark indices most at the market close today. 

“Foreign investors are pumping out funds in large quantities while support from domestic investors is helping the market to partially balance the pressure,” Vinod Nair, Head of Research at Geojit Financial Services said in a post market comment. 

He further said a similar level of volatility can be expected to continue until global uncertainties settle down leading to a softening of FII selling. 

We have collated views from different experts as to what investors should do when trading resumes: 

Expert: Ajit Mishra, VP - Research, Religare Broking Ltd 

Markets witnessed a decent recovery and gained over a percent, tracking firm global cues. The benchmark started with an upside gap and traded in a narrow range thereafter. Besides, indications from the domestic front are also not very encouraging.  

On the index front, 16,800 would continue to act as crucial support in Nifty while the 17,250-17,350 zone would be tough to cross. Keeping in mind the scenario, participants shouldn’t read much into the single-day rebound and stay light. 

Expert: Rupak De, Senior Technical Analyst at LKP Securities. 

The trend continues to be negative as the benchmark index Nifty remained below 17400. However, the Nifty has formed a bullish harami pattern on the daily chart, which suggests a possibility of a near-term recovery. On the higher end, Nifty may move towards 17400-17450 where once again it may find resistance. On the lower end support exists at 16800. 

Expert: Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.  

The Bank Nifty index is still trading below its 200 DMA, which is placed at the 36800 level. The index needs to cross this level decisively for resuming the up move. The index lower-end support stands at 36100 and, if breached will witness further downside towards 35800-35100 levels. 

Expert: Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas 

The Nifty witnessed a bounce back from the daily lower Bollinger Band on April 20. On the daily chart, the Nifty has formed an Inside bar pattern. Thus, the boundaries of the pattern that is 16824 & 17275 become crucial support & resistance respectively.  

From short term perspective, 17275-17300 is a key hurdle zone, which encompasses multiple parameters. If the index stays below this barrier, it is expected to trade with a sideways to downward bias. On the other hand, if the bulls manage to take out this hurdle, then the index will be poised for a larger bounce back.