Dalal Street Corner: Markets reclaim key levels to settle near 2-month highs; what should investors do on Thursday?

The Indian markets extended gains for the third straight session this year, led by rally in the banking and financials stocks on Wednesday. Both the benchmark indices – Sensex and Nifty50 – closed over above key level of 60000 and 17900-mark for the first time since November 17, 2021.  

Meanwhile, broader markets closed mixed, with mid-caps up marginally at 0.18 per cent on BSE and small caps down over a quarter per cent. While the 12-share banking index lead the maximum surge in the benchmark, as Nifty Bank was up over 855 points or 2.32 per cent to 37,896-level, led by private banks.  

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Similarly, the market breadth flat as midcap index ends just above flatline; advance-decline ratio at stood at 1:1. 

The banks’ share rose across the board as HDFC Bank, ICICI Bank and Kotak lead gains, while smaller banks like Federal, IDBI, Bandhan, DCB Bank gain 2-7 per cent each. The information and technology pack takes a breather from this week’s rally, as four out of five top index losers are IT counters.  

As many as 33 stocks advanced and 17 stocks declined on Nifty50 at the close. Financial majors such as Bajaj Finance and Bajaj Finserv closed as top gainers – each up 5 and 4.5 per cent, respectively, While Tech Mahindra and Infosys slumped most around 3 per cent, followed by Wipro, HCL Tech. 

Rohit Singre, Senior Technical Analyst at LKP Securities said, “Index has reached near its good hurdle zone of 18000-18100 zone wherein long positions can be trimmed, also if it managed to sustain above said resistance a fresh breakout is possible, and it may inch towards previous swing high.” 

On the other hand, a good support zone is formed near 17800-17700 zone any dip near mentioned support zone will be again fresh buying opportunity, Singre said in his post market comment. 

Vinod Nair, Head of Research at Geojit Financial Services said, “The domestic market witnessed a recovery following a mild dip though the global sentiments were not in favour of bulls. Increasing covid cases leading to stricter restrictions has pressurised market volatility.” 

He added, “The banking sector outshone other sectoral indices as few private lenders reported double-digit business growth during the third quarter. while IT stocks took a blow as investors awaited the onset of the quarterly results season.” 

US and Asian markets traded weak ahead of the release of the US Fed meeting minutes while European indexes held ground, Nair said in his post market comment on Wednesday. 

Nifty index opened positive and headed towards 17950 zones and continued its winning streak of the last fourth straight sessions led by buying interest at every key levels, Chandan Taparia Vice President | Analyst-Derivatives Motilal Oswal Financial Services Limited said in a comment. 

He added, “It gave its highest daily close of the last 35 sessions and closed with gains of around 120 points. It formed a Bullish candle on daily scale and has been forming higher highs - higher lows from the last four sessions.” 

Now it must hold above 17900, for an up move towards 18000 and 18200 whereas support shifts higher to 17777 and 17600 zones, the market analyst said in post market note. 

“Technically, the index has been trading with higher high & higher low formations from the last four trading sessions as well as given breakout above the upper band of falling channel formation which suggests an upside rally in the counter,” Palak Kothari Research Associate Choice Broking. 

On a daily chart, the index has confirmed the Three White Soldier candlestick pattern which points out bullish momentum for upcoming sessions, Kothari added further. 

“The index has been trading above 21&50-HMA which suggests strength in the counter. However, A momentum indicator MACD trading with a positive crossover on the daily time-frame.” analyst said. 

“At present, the Index has support at 17500 levels while resistance comes at 18000 levels, crossing above the same can show 18200-18300 levels. On the other hand, Bank nifty has support at 36800 levels while resistance at 38000 levels”, the research associate at Choice Broking also said.