Sensex just 48 pts away from 42,000; what should investors do?

Indian market closed in the green for the fourth consecutive day in a row and benchmark indices rose hit fresh record highs for the second day in a row on Tuesday, supported by gains in metals, IT, and consumer stocks.

The S&P BSE Sensex hit a fresh record high of 41,994 before closing the day at 41,952 which is just 48 points away from 42000 levels. The Nifty50 hit a lifetime high of 12,374.

Let’s look at the final tally on D-Street – the S&P BSE Sensex rose 92 points to 41,952 while the Nifty50 closed 32 points higher at 12,362. Both Sensex, and Nifty ended at fresh record closing highs.

Sectorally, the action was seen in FMCG, metals, Consumer Discretionary, IT, as well as auto stocks. Profit taking was seen in banks, energy, and realty stocks.

Amongst the broader markets, BSE Midcap and Smallcap continued to outperform and ended with gains of 0.7-0.8%.

The up-move was largely led by positive global cues over increasing optimism towards US-China trade truce.

Experts are of the view the pre-budget rally is likely to take Indian markets to new highs, but traders should remain cautious as earnings could induce volatility.

Investors should stay light with respect to trading positions as chances of further consolidation cannot be ruled out.

“Despite weak macro data (inflation) investors are pinning hopes on earnings recovery and sops from the Union Budget. However, we remain cautious on the markets given that the indices are at its peak levels,” Ajit Mishra, VP – Research, Religare Broking Ltd told .

“While the global cues too look positive currently, the progress of earnings season may continue to induce stock-specific volatility in the markets,” he said.

Top Nifty gainers – ZEE Entertainment, Hero MotoCorp, Britannia Industries, and Vedanta

Top Nifty Losers: RIL, UPL, IndusInd Bank, and Yes Bank

Sectors and Stocks:

Sectorally, the S&P BSE FMCG index rose 1.4 percent, followed by the Metal Index which gained 0.94 percent, and the Consumer Discretionary index was up 0.84 percent.

Profit taking was seen in S&P BSE Energy index which was down 0.48 percent, followed by Banks, and Realty indices.

Volume spike of 200-400% was seen in stocks like Aurobindo Pharma, Exide Industries, Tata Chemicals, Bata India, and NTPC.

Long Buildup – Tata Global, NTPC, MindTree, Tata Chemicals, and Wipro

Short Buildup – Shriram Transport, Chola Finance, Ramco Cement, Jindal Steel

As many as 86 stocks hit fresh 52-week high include names like SRF, HDFC, Alkem Laboratories, APL Apollo, Divis Laboratories, NIIT Technologies, Ipca Laboratories etc. among others.

Stocks in the news:

Private sector lender YES Bank share price was down over 8 percent after Kotak Institutional Equities maintained its sell call on the stock and cut its target to Rs 40 from Rs 55 per share.

Shares of IndusInd Bank fell nearly 4 percent after the lender reported sharp increase in gross slippages due to one travel account. The private sector lender registered a healthy 32 percent year-on-year growth in profit at Rs 1,300.2 crore in Q3 despite higher provisions.

Deepak Fertilizers: Shares of Deepak Fertilizers gained over 4 percent after the company sold its land in Dahej. The company informed exchanges that it has divested one of its plots in the industrial land in Dahej as part of the strategy to divest non-core assets.

India Cements: Shares of India Cements rallied 7 percent after ace investor Radhakishan S Damani increased his stake in the company by 3.43 percent during the October-December quarter

IRCTC: The share price of IRCTC gained 3 percent after the company received approval to operate Ahmedabad-Mumbai Central Tejas Express.

Technical View:

Nifty formed a bullish candle on the daily charts| Supertrend indicator gave a buy signal

There is one concern that is most of the indicators are in overbought zone; hence, some consolidation cannot be ruled out

Moreover, daily MACD generated a buy signal. However, its impact can be limited as market has already rallied in last 4 trading sessions from the lows of 11929.

Besides, similar buy signal from MACD in last December around 12200 levels failed to add incremental gains to Nifty which topped out in succeeding two sessions triggering a bigger correction from the highs of 12293 – 11929, suggest experts.

For time being traders will be better off by giving a miss to the limited gains on the upsides whereas weakness can be expected on a strong close below 12300 levels, they say.

Max Call OI: 12500, 12400

Max Put OI: 12000, 12200Get access to India’s fastest growing financial subscriptions service Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the website or mobile app.