Rally is not over, investors should sit tight

Indian markets are consolidating in a narrow range on April 2 but the good news is that bulls still remain in charge of D-Street. The S&P BSE Sensex closed above 39,000 for the first time while the Nifty50 closed above 11,700 for the first time since August 28, 2018.

The final tally – the S&P BSE Sensex rose 184 points to close at 39,056 to register its fresh closing high while Nifty50 rose 44 points to end at 11,713.

Broader markets underperformed as the S&P BSE Mid-cap index slipped 0.04 percent while the S&P BSE Smallcap index fell by 0.18 percent.

In terms of sectors, BSE Realty rose 2.6 percent, followed by the S&P BSE Telecom index that was up by 1.5 percent, and the S&P BSE Auto index closed with gains of 0.94 percent.

In the near term, analysts expect some consolidation after the recent run-up, but what should investors do now, sit tight or book profits?

Well, experts feel that after the recent upmove seen in Indian markets, some consolidation was on cards, but the rally may not be over and investors should sit tight on their positions if they are long on the index or have a positive view.

“We have seen a sharp rally of 1,150 points in Nifty50 from February 19, 2019 and even supports are gradually shifting higher that suggest the trend is intact. This momentum is likely to get extended towards 12,000, because we are in the pre-election rally,” Chandan Taparia, Associate Vice President, Analyst-Derivatives at Motilal Oswal Financial Services Limited told .

“However, investors should avoid taking fresh long positions as the risk-to-reward ratio may not be favourable. But, if you have an investment horizon of next 3-6 months, we suggest them to sit tight and participate in the next leg of the rally,” he said.

Stocks in news:

Tata Motors gained more than 8 percent despite the automotive company reporting a 1 percent dip in total sales at 68,709 units in March as compared to 69,409 units in the same month last year.

Godrej Agrovet shares were up 3 percent after Motilal Oswal initiated coverage with a buy call, citing strong growth prospects in crop protection and oil palm business segments.

Everest Organics rose 15 percent after the Tamil Nadu Pollution Board revoked its factory closure order.

Tera Software was locked at 20 percent upper circuit after receiving a big order in Odisha.

Shares of Cyient tumbled nearly 11 percent after a delay in delivery order worth $ 5 million due to issues related to regulatory clearances.

Global updates:

Asian markets ended with marginal gains after the Reserve Bank of Australia kept its policy cash rate unchanged at 1.50 percent.

Shanghai Composite was up marginally at 3,176.82, while Nikkei ended flat at 21,505.31. Kospi gained 0.41 percent to end at 2,177.18.

European markets are trading higher after upbeat factory activity data from the US and China eased concerns over the global economy.