A close above 11K could trigger short covering rally in Nifty

Indian markets witnessed a strong session despite muted global cues that suggest bulls are here to stay. The index not only reclaimed 10,900 but closed just a shade below 11,000.

Positive services PMI data, rise in rupee boosted the sentiments. The broader markets continued their outperformance for the fourth straight session in a row.

Traction was seen in high beta names as both Small and Midcap indices outperformed the benchmark indices. The S&P BSE Mid-cap index closed 2.01 percent higher and the S&P BSE Small-cap index rose 3.1 percent compared to 1.05 percent rise in Sensex.

Technically, the S&P BSE Sensex closed above its 200-DMA placed around 36,071 while Nifty50 also climbed above its long-term average placed at 10,863, which is positive news for the bulls.

The S&P BSE Sensex closed 378 points higher at 36,442 while the Nifty50 added 123 points to end at 10,987.

In terms of sectors, barring IT which ended lower, strong buying was witnessed across all the other sectors such as auto, oil & gas, consumer durables, metals, and realty being the top gainers, up 2-3.1 percent.

Experts attributed the gains ease in tension around a geopolitical situation that supported investors’ sentiment. But, the broader market and non-Nifty50 stocks have become the talking point that outperformed benchmark indices for yet another day.

“In the last 2-3 trading sessions what we have observed is a clear up move coming in lot of non-Nifty50 names that indicates that the rally is now broad-based and if the rally sustains then we are clearly poised for an up move towards 11,300-11,400 in next few weeks,” Ashish Chaturmohta, Head of Technical and Derivatives at Sanctum Wealth Management

“But, once we see a sustainable move above 11,000, it could trigger short coverings in the market thanks to huge Put Writing seen around 11,000-11,200,” he said.

Stocks in news

ITC shares rallied nearly 2 percent after a media report suggested that the company is likely to have hiked the price of three cigarette brands.

Shares of Mishra Dhatu Nigam surged 10 percent after the company received order worth Rs 475 crore.

Shares of Tata Motors gained 7 percent on the buzz of stake sale by the company in JLR. Meanwhile, the company reported a weak set of sales numbers for the month of February 2019.

The share price of Indian Hume Pipe Company surged 5 percent after the company received three letters of intent of Rs 187 crore.

Selan Exploration Technology rose 5 percent after Ministry of Petroleum and Natural Gas approved the proposal for grant of extension of 10 years w.e.f. 13.03.2020 for the entire contract area measuring 36 Sq. Km of Bakrol field.

Global Update

European markets are trading flat to positive as investors are monitoring various political developments across the globe.

Asian markets ended mixed as China slashed its growth target to 6-6.5 percent. Shanghai Composite rose 0.88 percent to 3,054.25, while Hang Seng index ended flat at 28961.60.

Nikkei was down 0.44 percent to 21,726.28, while Kospi shed 0.52 percent to 2,179.23.