Sensex, Nifty snap two-day losing streak, financials outperform; key factors behind market rally

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Published: May 6, 2020 4:15:50 PM

The rally in Sensex and Nifty was supported by buying in financial counters with HDFC Bank, HDFC, ICICI Bank and Bajaj Finance as top index contributors

sensex, nifty Rising from the day’s low of 9,116.50, Nifty ended just below 9,300-mark at 9,288.

The headline indices, BSE Sensex and Nifty 50 traded in a choppy fashion on Wednesday to close in the positive territory. The 30-share index Sensex rose 527 points from day’s low to end at 31,686, while NSE’s Nifty gained 172 points from an intraday low to settle at 9,288. The rally was supported by buying in financial counters with HDFC Bank, HDFC, ICICI Bank and Bajaj Finance as top index contributors. “Institutional investors appear to be realigning portfolios with rotational sell flows visible in previous out-performing sectors such as FMCG and Pharma, and inflows into cyclical like Autos and Infra stocks,” S Hariharan, Head – Sales Trading, Emkay Global Financial Services, said. India VIX corrected by over 5 per cent and remained below 42 in today’s trade.

Top BSE Sensex gainers: M&M was the top gainer, up 5.27 per cent, followed by Bajaj Finance, HDFC Bank and ICICI Bank. ITC was the top Sensex laggard with a decline of nearly 6 per cent. Hindustan Unilever (HUL), TCS, Infosys, Sun Pharma were among other losers on the pack.

Nifty Bank index gain 400 points:  Barring Nifty FMCG and Nifty PSU Bank, all the sectoral indices settled in green. Nifty Bank index gained 422 points or 2.19 per cent led by gains in Bank of Baroda, Kotak Mahindra Bank, SBI and Punjab National Bank

Broader markets: BSE MidCap and BSE SmallCap indices too ended higher in line with frontline indices. “The broader markets too registered modest gains as midcap and smallcap indices ended higher by 0.8% and 0.5% respectively,” Ajit Mishra, VP – Research, Religare Broking Ltd, said.

Technical observation: Rising from the day’s low of 9,116.50, Nifty ended just below 9,300-mark at 9,288. “The short term trend of Nifty is slightly positive with range bound action. There is a possibility of minor upside bounce in the next 1-2 sessions, maximum up to 9450-9550 levels. Eventually, Nifty could fail to sustain the highs and one may expect higher levels of weakness soon in the market. Hence, one may adopt a sell on rise strategy in the market,” technical analyst Nagaraj Shetti, HDFC Securities, said.

Market outlook by Ajit Mishra, VP – Research, Religare Broking Ltd

We feel it’s just a breather after the recent slide and the bias would remain on the negative side till Nifty trades below 9700 zone. On the downside, we are eyeing 8900-9000 zone to be tested shortly. Traders should focus more on position management as we’re seeing erratic swings across the board.

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