Dalal Street Corner: Sensex, Nifty50 extend gains, end over 1% higher today; what should investors do on Thursday?

The Indian markets on Wednesday gained for second straight session, led by banks and auto stocks. The Sensex surged over 650 points, while Nifty50 settled above 17450-mark at the market close. While broader markets jumped as same as benchmarks by over 1 per cent at the market close today.

Heavyweights such as HDFC Bank, Reliance Industries, Infosys and ICICI Bank were the top Nifty50 contributors at the close. Coal India considering second interim dividend has helped the stock to gain more than 5 per cent.

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Almost all sectoral indices closed in the green except for PSU Bank index. Nifty Auto soared most by over 2 per cent, followed by metals and banking stocks. As many as 42 stocks closed in the green, while 8 in the red zone on the Nify50 on Wednesday.

The Monetary Policy Committee of Reserve Bank of India bi-monthly policy scheduled  on Thursday may play an important role in the direction of the market ahead of the weekly option expiry, the analyst expects.

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

Expert: Vinod Nair, Head of Research at Geojit Financial Services.

“The domestic market joined the global rally with all major sectors barring PSU Banks trading with gains. US stocks rallied yesterday shrugging off concerns over rising crude oil and rate hike worries ahead of the release of US inflation data. 

“RBI’s policy announcement will be the key focus tomorrow as domestic inflation and policy tightening by global central banks would pressurize the central bank to adopt a similar stance.”

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

“Nifty has formed a green candle after a Dragonfly Doji pattern on the daily chart suggesting a short-term bullish reversal. On the higher end, immediate resistance is visible at 17530. A decisive move above 17530 may induce a rally towards the recent peak of 17775-17800. On the lower end, support is placed at 17315.”

Expert: Parth Nyati, Founder, Tradingo.

There was a relief rally in the market after a sharp sell-off in the last few days thanks to improved global sentiments and a fall in crude oil prices. The markets on Tuesday were extremely oversold near an important support zone and morning panic has taken out lots of weak hands before second-half recovery.

Technically, Nifty is giving proper follow-up of bullish hammer candlestick formation formed near psychological support of 17000 and manages to close above its 50-DMA however there are still multiple resistances like 17500/17650 before 17800 level.  On the downside, 17000-16800 is a critical base while 17300 will act as an immediate support level.   

Banknifty has better a structure because it manages to close above its 20-DMA following a bullish hammer candlestick formation where 39500 is the next important resistance level while 38200-38000 is an immediate support zone.