Dalal Street Corner: Markets snap 5-day losing streak, witness smart recovery; What should investors do on Thursday?

The Indian markets on Tuesday snapped a 5-day losing streak, led by banks and autos, and witnessed a smart recovery from opening lows, eventually settling at day’s high. The Sensex closed over 366 points higher, while Nifty50 ended above the 17,250-mark at the market close today. 

Even the broader markets – Nifty Mid and Small Cap registered growth by 1 per cent outperforming the benchmarks during Tuesday’s session. Similarly, the 12-share index Nifty Bank grew over 2 per cent, aiding the strength in Nifty50 today. 

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India VIX was down by 6.42% from 22.82 to 21.35 levels. Volatility cooled down from higher zones but it is still hovering at higher zones signaling wild swings. 

The market breadth favours advances, as the advance-decline ratio stood at 2:1. Strong Maruti earnings lift other auto stocks as well such as Hero MotoCorp, Tata Motors and Bajaj Auto each up over 2 per cent each at the market close.  

From broader markets, Pidilite reported Q3 earnings lower than estimates, the stock declined over 1 per cent on the exchanges. Similarly, SRF closed 2 per cent higher but off intra-day highs despite better-than-expected October-December quarter for the financial year 2021-22.  

Day after weakness, Zomato surges 20 per cent from day’s low to close with a gain of 10 per cent, while Nykaa slipped another 4 per cent on Tuesday, is down 17 per cent in the last two sessions. 

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

Expert – Rupak De, Senior Technical Analyst at LKP Securities 

Nifty witnessed a recovery during the day as it found support around 80% retracement of the previous rally from 16400 to 18350. A large green candle with a lower shadow has been formed on the daily chart which indicates buying at the lower levels of the day. 

Going forward, the resistance at 17400 may challenge the bulls; however, a decisive move above that level may take the Nifty higher towards 17800. On the lower end support is visible at 17000/16800. 

Expert – S Ranganathan, Head of Research at LKP securities  

As markets approach important near-term events, the mood appeared circumspect although on the positive side the street is going into the Union Budget much lighter post the recent correction. 

Afternoon Trade witnessed investor appetite in stocks of PSE and advance-decline ratio ended the day on a positive note" 

Expert – Vijay Dhanotiya, Category Lead- HNI Products at CapitalVia Global Research Limited. 

The market witnessed the continuation of the strong pullback rally in the market after a big correction that occurred in the market on Monday.  

While sustaining above 17000 is the key factor from a short-term perspective, a decisive breakout above the zone of 17400 could open the gate for a movement till 18000.  

The momentum indicators like RSI, MACD indicate a positive outlook to continue and market breadth to improve further after the decisive level breakout of the resistance zone. 

Expert – Chandan Taparia Vice President | Analyst-Derivatives Motilal Oswal Financial Services Limited 

Nifty recovered by around 500 points from its intraday lows and closed above 17250 zones with intraday gains of 128 points. It formed a big Bullish candle on the daily scale but has been forming lower lows from the last six sessions.  

It has to hold above 17250 zones, to negate the negative price formation of lower highs and to start the next leg of bounce towards 17500 and 17777 zones whereas support exists at 17000 and 16850.