Nifty continues to remain in an uptrend in the medium and long term, so buying on dips should continue to be the preferred strategy.
Participants should keep a close watch on earnings announcements as well as global markets for cues
Indian share markets rallied for the seventh consecutive day on Friday, adding 4.4 per cent in the current week. Headline indices BSE Sensex and Nifty 50 have managed to maintain 7-month highs. The S&P BSE Sensex jumped 327 points, or 0.81 per cent to settle at 40,509 while the broader Nifty 50 index ended at 11,914, up 80 points, or 0.67 per cent. Markets cheered the RBI MPC decision of keeping the interest rates unchanged at 4 per cent. Index heavyweights such as HDFC Bank, ICICI Bank, Infosys, Axis Bank and L&T contributed the most to indices’ gain today. “Markets have become overbought after a relentless rise over the past 2 weeks. Advance decline ratio, however, continues to remain in the negative over the past few days suggesting profit-taking in the broader markets. Over the next 1-2 days we expect even the Nifty to come under some pressure,” said Deepak Jasani, Head of Retail Research, HDFC Securities.
Sensex, Nifty records best winning streak in almost a year: Jasani added that Indian benchmarks have posted their best winning streak in almost a year today. Headline indices reversed losses and rose on the announcement of MPC meet outcome. Aided by positive global cues, BSE Sensex and Nifty 50 added 4.4 per cent each this week.
Nifty PSU Bank index jumps 3%: The trend among the sectoral indices was mixed. Nifty PSU Bank index jumped over 3 per cent, followed by Nifty Financial Services and Nifty IT indices. On the contrary, the Nifty Pharma index lost the most in today’s session.
RBI keeps repo rate unchanged: RBI Governor Shaktikanta Das has kept the repo rate unchanged at 4 per cent once again in the latest monetary policy committee meeting. The stance has also been maintained accommodative. “RBI finally gave a GDP forecast and expects a contraction at 9.5% for FY21 with downside risks. As the economy continues to be in a fragile state, recovery in growth assumes primacy,” Jasani added.
Broader market: The broader market once again underperformed today. The buying interest was only limited to large caps as S&P BSE Midcap and S&P BSE Smallcap ended lower by 0.5 per cent and 0.3 per cent, respectively. “As Nifty approaches lifetime highs, we can expect a rotation of performance among sectors with sideways movement in broader indices and consolidation of strong market performance,” said S Hariharan, Head – Sales Trading, Emkay Global Financial Services.
UTI AMC, Mazagon Dock listing on Monday: UTI AMC and Mazagon Dock Shipbuilders are scheduled to list on stock exchanges on Monday, as the basis of initial public offer (IPO) allotment has been finalised. Analysts expect Mazagon Dock Shipbuilders to list with a premium over issue price, while they see a discount listing of UTI AMC.
Nifty 50 looks to scale up towards 12050-12150 in short term
On the weekly chart, Nifty has formed strong Marubozu bullish candle and managed to cross previous swing high of August 2020 on a closing basis. Rajesh Palviya, Head Technical & Derivatives, Axis Securities, told Financial Express Online that now if Nifty continues to sustain above 11880 it could scale up towards 12050-12150 in short term, however, on the downside, 11800 -11720 is likely to act as good support in minor corrective action,” Palviya added. He expects Nifty may trade in a range of 11600-12400 for the month of October. “Nifty continues to remain in an uptrend in the medium and long term, so buying on dips continues to be our preferred strategy,” Palviya said