Bulls back on D-St! Hold positions and wait for a breakout above 11,772

Bulls pushed the index back above crucial resistance levels on October 23 to help the Sensex end above 39,000, while the Nifty50 reclaimed 11,600 levels.

Late buying helped bulls take charge of D-Street. The index took support at its 5-days Exponential Moving Average (EMA) for the 8th consecutive day in a row. This particular short term moving average has been acting as a big support since 10 October.

Technical experts advise investors to hold positions and wait for a breakout above 11,772-11,798 to initiate fresh long positions.

The Nifty50 seems to be struggling at 11,700 because it is an important swing high. The broader market indices exhibited a mixed trend wherein BSE Midcap ended with losses of 0.1 percent while BSE Smallcap’ closed 0.3 percent higher.

On the sector front, Oil & Gas, Realty, Capital Goods and Metals closed the session in the red. While Auto, IT and Consumer Durables were the top gainers, up in the range of 0.8-1.2 percent.

Experts feel that the market is likely to remain volatile in the near term with stock-specific opportunities. On the global front, investors will keep a close eye on US-China trade talks and progress on the Brexit deal.

“Markets largely remained positive throughout the day led by selective buying in large caps namely in Banking & IT stocks. Auto and consumer stocks witnessed some resurgence on the expectation that the worst-case scenario is factored in the stock prices,” Vinod Nair, Head of Research, Geojit Financial Services Ltd told .

“Due to corporate tax cut, Q2 earnings growth is better, however, the market will review the outlook for revenue growth to assess any potential for re-rating,” he said.

Stocks and sectors:

The S&P BSE Auto index outperformed, up 1.1 percent, followed by IT index which gained 1.15 percent, and Consumer Durable index which was up 0.8 percent.

On the losing front, the S&P BSE Telecom index plunged more than 3%, followed by the Oil & Gas index which was down 1.4 percent, and the Realty index slipped 1.08 percent.

Volume spike was seen in stocks like Bajaj Auto, Havells India, SRF, Hexaware, and Colgate Palmolive.

Long Buildup was seen in stocks like NIIT Tech, Jubilant FoodWorks, Bajaj Auto

Short Buildup was seen in stocks like Chola Finance, RBL Bank, and Hexaware

Stocks in news:

Shares of HCL Technologies climbed 2.93 percent to Rs 1,095.65 on BSE on October 23 ahead of the company’s September quarter earnings wherein the company is expected to report double-digit growth sequentially.

Shares of Bajaj Auto gained 1.11 percent to settle at Rs 3,158 after the company reported a healthy 21.7 percent year-on-year growth in Q2 FY20 profit, largely driven by the corporate tax rate cut.

Shares of Affle India rallied 14.86 percent to Rs 1,397.80 after the company filed 14 technology patents in Singapore and the US.

Shares of ICICI Securities closed with a gain of 9.28 percent at Rs 311 after the company reported better-than-expected earnings in Q2 FY20.

Kotak Mahindra Bank shares slipped 1.31 percent to Rs 1,607.50, a day after the company’s Q2 scorecard showed its asset quality weakened sequentially.

Technical View:  

Nifty formed a ‘Doji’ kind of pattern on daily charts

Bulls appear to have hit a pause button as they failed to decisively get past its near term critical hurdle present around 11,700 levels, suggest experts.

Nifty can be expected to remain sideways but weakness will be confirmed on a close below 11,550 levels which shall accentuate the selling pressure with initial targets placed around 11,400 levels, they say.

Three levels: 11554, 11651, 11700

Max Call OI: 12000, 11700

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