Stock indices in India advanced in Wednesday’s early trade after their eighth consecutive day of decline. The S&P BSE Sensex edged 0.60 per cent higher to 59,316.12, while the Nifty 50 index advanced 0.64 per cent to 17,415.15 as of 10:55 am.
Mahindra & Mahindra, Tata Steel, HCL Technologies, Axis Bank, Tata Consultancy Services, Maruti Suzuki, Larsen & Toubro, Bajaj Finserv, Tech Mahindra, State Bank of India, Tata Motors and Bajaj Finance were among the major gainers in the Sensex pack.
Power Grid, HDFC Bank, Nestle and Hindustan Unilever were the laggards from the pack.
“We are seeing a relief rally in the market because the market is looking extremely oversold in the near term because the long exposure of FIIs in index futures stands at a multimonth low of 15%, the put/call ratio is at 0.67, and the reading of the RSI on the daily chart is at 30,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
“On the upside, 17450 is an immediate hurdle, and then 17625 and 17750 are the next hurdles. On the downside, 17130 is an immediate support level, while 16800 is a major support for the Nifty,” Meena said.
‘Tug of war going on between FIIs and DIIs’
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “There is a tug of war going on between FIIs and DIIs now. During the last 5 sessions FIIs sold equity for ₹10049 crores; the DIIs matched this with buying for ₹10200 cores. So, even though the institutional net buying is positive, the market has been trending down on negative sentiments and increasing short build up in the system.”
Analysts, however, cautioned that Wednesday’s moves were likely temporary.
“An intermittent rally can certainly happen after the recent correction in the markets,” said Anita Gandhi, director at Arihant Capital Markets, adding that for the gains to sustain, “clear triggers are needed”.
Vijayakumar said, “There are no positive triggers to take the market higher, but short covering may happen since the market is oversold. The only sensible investment strategy in this highly uncertain time is to slowly accumulate high quality stocks for the long-term, ignoring short-term volatility. Banks, capital goods and IT stocks can give good returns for the medium to long run.”
“Bank Nifty is showing signs of bottoming out, as we can observe a double bottom formation with a bullish engulfing candlestick formation near its 200-DMA. On the upside, the 20-DMA around 41000 will be an important hurdle. On the downside, 39400 is a key support level,” the Swastika Investmart’s head of research said.
The rise in domestic equities was in line with an uptick in Asian peers after February manufacturing activity in the world’s largest producer of metals, China, rose to over-a-decade-high levels on reopening.
Markets were also parsing through details of India’s GDP data released Tuesday evening, weighing it against concerns of a prolonged high-interest rate cycle in the US and sustained foreign selling of domestic equities.