Rally may extend to 11,500, stick to quality stocks

It can’t get better than this if you trade in equity markets. Three straight sessions of rallies put Nifty50 well above 11,300 and Sensex above 37,700. Despite muted global cues in the morning, bulls managed to charge ahead which led to a strong rally in banks, realty, and energy stocks.

The S&P BSE Sensex closed 216 points higher at 37,752 while the Nifty50 ended at 11,341, up 40.50 points. Experts see the rally extending towards 11,400-11,500 supported by banks and heavyweight stocks.

The Nifty Bank ended at a record close after hitting an intra-day life high of 28,927.70. The index rallied for the third consecutive day to post its biggest 3-day gains since October 2017, according to CNBC-TV18.

The index closed at 28,884, up 440 points led by gains in HDFC Bank, IndusInd Bank, Yes Bank, State Bank of India and ICICI Bank.

The action was evident in many large as well as mid-cap names. As Sensex climbed 2019 high, over 60 stocks hit 52-week highs that include HDFC Bank, RIL, Axis Bank, ICICI Bank, Indian Hotels, Karnataka Bank, among others.

A strong rally on D-Street pushed the bears on the sidelines as bulls took charge of D-Street led by liquidity infused by foreign investors who have poured in more than Rs 10,000 cr this month (as of 12 March).

When most of the stocks are flying highs, analysts advise investors to not fall prey to high beta stocks that might be showing momentum but instead focus on quality companies.

“Nifty gave a closing above 11,333 which was acting as a crucial resistance level. The next level to watch out would be 11,400-11,500, which will act as next resistance levels. Even the put-call-ratio (PCR) is not showing any signs of fatigue that suggests that the rally is likely to continue,” Yogesh Mehta, Vice President-Equity Advisory at Motilal Oswal Securities told .

“When the market moves from strong disappointment to optimism, retail investors should watch out for the stocks that they pick for their portfolio. Stick to quality companies with earnings visibility and do their own research before jumping in to buy the stock,” he said.

Stocks in news

Shares of DLF rose nearly 3 percent after CLSA upgraded the stock to Buy from Sell. The brokerage also raised the target price on DLF to Rs 229 from Rs 167.

SpiceJet and Jet Airways fell 2 percent each after grounding of Boeing 737 MAX 8 aircraft in India.

Shares of A2Z Infra Engineering was locked at 5 percent lower circuit on March 13 after the company lost its management control over its subsidiary company.

Global updates

European markets are trading mixed after lawmakers rejected the UK’s Brexit deal with the EU, which is a major defeat for British Prime Minister Theresa May.

Asian indices finished lower on the back of fresh global uncertainties as Nikkei was down 1 percent to close at 21,290.24 and Kospi shed 0.41 percent to 2,148.41.

Shanghai Composite fell 1.09 percent at 3,026.95, while Hang Seng also fell 0.39 percent to close at 28,807.45.