Terrific Tuesday! Bulls push Nifty back above 11,200 levels

From a terrible Tuesday, it turned out to be a terrific Tuesday as bulls took control of D-Street in the second half of the trading session, snapping nine-days of a bear grip, thanks to short coverings in beaten down sectors.

At close, the Sensex rallied 227 points to 37,318 and the Nifty ended 73 points higher at 11,222 levels.

On the sectoral front, the BSE Telecom index rose 2.8 percent, followed by the BSE Energy index (up 1.6 percent), and BSE Capital Goods index (up 1.4 percent). On the losing front, IT stocks came under pressure.

The broader market indices — BSE Midcap and Smallcap — too ended 0.6 percent and 0.3 percent higher, respectively.

The rally was largely on the back of short-covering and investors should not confuse the move with strength in the index. Every bounceback will be used to book profits, experts said.

In Tuesday’s session, the Nifty staged a bounceback from 11,100 levels to reclaim 11,200 levels but found resistance around its five-day Exponential Moving Average (EMA).

“The market found some respite after many days of consolidation due to expectation of ease in trade tensions between US and China, as US President Donald Trump sounded optimistic about the upcoming meeting,” Vinod Nair, Head of Research, Geojit Financial Services, told Moneycontrol.

“Short covering was seen in beaten down sectors like banks and pharma, while IT continued to underperform due to strength in the dollar-rupee. Investors are not very aggressive in the market as every rally will be used as an opportunity to book profit and remain watchful on quarter earnings and ahead of the election verdict on May  23,” he said.

Investors should use dips of the last two-weeks, when the market fell for nine consecutive days in a row, to buy into quality stocks. Traders should avoid leverage as volatility is here to stay, experts said.

“Indian markets seem to have sensibly responded to the trade spat between US and China and hopefully this too shall pass. Investors should buy quality companies on such panic selling days,” Umesh Mehta, Head of Research, Samco Securities, said.

Stocks in news:

Jet Airways: The stock ended 7.42 percent lower after Deputy Chief Executive and Chief Financial Officer (CFO) Amit Agarwal resigned from the beleaguered airline.

Vodafone Idea closed 3.11 percent lower after global research firm CLSA initiated coverage with a Sell rating on the stock and cut its target price to Rs 12.50 from Rs 27 per share earlier.

Sun Pharmaceutical Industries’ ended Tuesday’s session with a 5.87 percent cut, just days after more than 40 states in the US filed a lawsuit alleging artificial price inflation by drug manufacturers.

Siemens India rose nearly 4 percent after it reported a net profit of Rs 280 crore for the second quarter of FY19, up 27.6 percent over the same period last year.

Global update

Asian markets ended lower on Tuesday, a day after Beijing raised tariffs on some American goods in retaliation for Washington’s decision last week to increase duties on Chinese products.Shanghai Composite ended 0.69 percent lower at 2,883.61, Hong Kong’s Hang Seng index fell around 1.7 percent and Nikkei 225 dipped 0.59 percent to close at 21,067.23. The the Kospi bucked the overall trend, ending up 0.14 percent to close at 2,081.84.