Dalal Street Corner: Markets start 2022 on a bullish note - what should investors do on Tuesday?

The Indian markets welcomed the new year with strong gains, as both the benchmark indices – Sensex and Nifty50 – jumped around 1.6 per cent. The former closed 929 points higher at 59,183 level, while the Nifty50 gained 272 points to end at the 17,626-mark. 

In today’s run-up, a sharp uptick in ICICI Bank and HDFC Bank lead the 12-share Nifty Bank to close over 200-DMA. The banking index grew over 940 points or 2.65 per cent to 36421.9-level.  

As many as 44 stocks closed in the green and 6 closed in the red on the Nifty50 at the market close. Coal India closed as the top gainer up over 6 per cent, followed by Eicher Motors closed at second-best after Royal Enfield sales boost in December 2021 auto sales. 

On the contrary, the pharma stocks such as Cipla and Dr Reddy’s closed as top laggard down over 1 per cent, followed by M&M, Divis Lab, Tech Mahindra, Nestle India each declined marginally. 

Broader markets underperformed the benchmarks as the mid and small cap each gained over 1 per cent. In this, NALCO closed 2 per cent higher on positive management commentary as third-quarter results will beat the previous quarter performance.  

Similarly, RBL Bank ends with gains of 5 per cent today after a sharp decline last week, while an 11 per cent rise in M&HCV sales for December lifts Ashok Leyland, stock above 200-DMA. 

All sectoral indices except Nifty Pharma end in the green today, with banking and financial sectors, aided the market most to grow at the close on Monday. 

Vinod Nair, Head of Research at Geojit Financial Services in the post-market comment said, “Domestic bourses kicked off the New Year on a strong footing supported by banking, auto and IT stocks, following positive cues from global markets.” 

He added, “Auto stocks were in focus today as investors digested the mixed auto sales numbers amid the ongoing chip shortage. India’s Manufacturing PMI continued to be in the expansion zone at 55.5 in December supported by strong momentum in production and new orders, although the growth was slower on a sequential basis.” 

Similarly, S Ranganathan, Head of Research at LKP Securities also said, “As India widens its vaccine coverage, Bulls ushered in the New Year in style as the Nifty Bank led the rally with good support from other sectoral indices buoyed by positive global cues.” 

“As India achieved the fastest rate of growth in Renewable Energy capacity addition during the last few years, it is indeed remarkable that the country was able to meet its non-fossil fuel targets almost a decade ahead of its committed deadline,” Ranganathan added. 

The analyst added the market breadth was extremely positive with a host of small and midcaps across sectors posting smart gains 

“As expected on Friday, we have achieved the target of 17600 and should now be headed to 17850 as the next level of resistance. Post that 18050 would be the next possible target for the Nifty,” Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments 

Vijay Dhanotiya, Senior Research Analyst at CapitalVia Global Research Limited said, “The market witnessed some strong trend after breaching the level of 17400. While sustaining above 17600 is the key factor from a short-term perspective, market research suggests maintaining above this level is important for the market to gain momentum and extend the rally until 18000.” 

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas mentioned, “We need to see whether the index sustains above 17600. If it does so, then the index can target 18000 going ahead. The hourly chart shows that the entire recovery is panning out in a rising channel.” 

The lower channel line along with the key hourly moving average that is 17400 will now take the role of a crucial short-term support, Ratnaparkhi added in his post market comment on Monday.