Opening Bell: Nifty above 17,200, Sensex adds more than 400 points; realty, auto stocks among top gainers

The domestic equity market extended gains on Thursday and opened positive in line with the trends on SGX Nifty. The Futures index on the Singaporean exchange was trading 90 points higher around 9 am on Thursday.  

The broader Nifty 50 opened above 17,200 and the Sensex added more than 400 points in the opening trade amid improved global cues. The two indices opened at 17,234.60 and 57,458.60 respectively. 

The 12-share Bank Nifty opened with over 200 points to 36,513.10.

"Markets often overreact, both on the upside and downside. As sanity sets in, prices normalise. The stretched valuations of IT stocks, particularly in the mid-cap space, was the consequence of the market overreacting to excellent results and good earnings visibility. Slight disappointments in expectations swing the pendulum to the other side, depressing prices. Even though there is some margin pressure in IT, results of mid-cap IT stocks indicate that earnings momentum is strong," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Similarly, the relentless selling in HDFC twins by FIIs and shorting by bears who swim with the FII current have  created another case of overreaction depressing prices to fundamentally unjustifiable levels, said the expert.

"Short-term overreaction and corrections in valuations are opportunities for discerning long-term investors,".added Vijaykumar.
 

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Meanwhile, in the broader market, Nifty Midcap and Smallcap indices were trading higher by 0.8% and 1.1% respectively. 

Sector-wise, all sectors were sitting in the green with Realty and media gaining the most 

In the pre-open, the Sensex rose over 150 points and 26 shares advanced and 4 declined on the 30 share index.  

"Nifty closed higher at 17,136 on Wednesday forming an Inside bar, while VIX ended at ~18-level. The Index traded in the range of the previous session, which might indicate some contraction/consolidation to occur in the near-term," said Viraj Vyas, Technical and Derivatives analyst at Ashika Broking.  

Immediate support is seen at 16,900-16,800-zone, failing to hold on to that might result in sharp correction towards 16,400-16,500-zone, while pull-backs if any, would find resistance at 17,500-17,400-zone, he added. 

Earlier, Asian markets were trading mixed on Thursday as Japanese Nikkei 225 was trading higher by more than 1%, Hang Seng Index at the Hong Kong Exchange dropped 0.4% and Chinese Shanghai Composite traded flat with marginal cuts in the morning trade.  

On Wednesday, in the US market, Dow Jones jumped 250 points, however correction in Netflix forced Nasdaq to close 167 points lower, S&P 500 too ended marginally lower by 3 points to close in the red.