Sensex reclaims Mount 32K; time to book profits or stay put?

Indian markets closed in the green for the second straight day on April 28, which helped the S&P BSE Sensex climb above 32,000, while the Nifty50 reclaimed 9,300 and closed a shade below its crucial resistance level of 9,400.

Let’s look at the final tally on D-Street: the S&P BSE Sensex rose 371 points to 32,114 while the Nifty50 closed with gains of 98 points at 9,380.

Sectorally, the action was seen in banking, consumer durables, oil & gas, and auto space while profit-taking was visible in healthcare, telecom, FMCG and power indices.

On the broader markets front, the S&P BSE Midcap index rose 0.8 percent while the S&P BSE Smallcap index gained 0.77 percent.

Financials led the rally on D-Street and news from IndusInd Bank and Reliance Industries lifted sentiment, say experts.

“Benchmark indices ended positive, tracking global markets, led by financials. Hopes of a fiscal stimulus have given support to the markets. Stock-specific news reactions are happening based on the results and management commentary,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“The sustainability of this rally depends on the easing of lockdown measures and the measures to get businesses back on track.”

Top Nifty gainers include Axis Bank, HDFC, Bajaj Finance and IndusInd Bank.

Top Nifty losers include NTPC, IOC, HCL Technologies and Sun Pharma.

What should investors do?

The Nifty50 is now trading near its crucial resistance levels and some bit of profit-taking is expected around 9,400. The last time the Nifty50 reclaimed 9,400 was in March and we saw a selloff that took the index below 9,000.

Will we see a similar outcome this time as well? Experts say a close above 9,400 is crucial for the Nifty to chart the next move on the upside, else we could see some profit-taking.

“The Nifty closed the day at 9,381 and formed a Dragon Fly kind of Doji on the daily chart, which hints at uncertainty in the markets. The index has formed stiff resistance near 9,400 zone,” Rohit Singre, Senior Technical Analyst at LKP Securities said.

“If the index manages to hold above 9,400, then we may see some more gains towards the overall hurdle zone 9,500-mark and on the downside, the index has good support near the 9,270-9,200 zone.”

However, not all experts are bullish on the index.

Manav Chopra, CMT, Head Research – Equity, Indiabulls Securities Ltd, is of the view that the Nifty is hinting towards a short-term breakout, which can push the index higher by around 200 points, but one should not miss the bigger picture as overall it is a bear market rally.

“From a broader perspective, we remain contrarian bearish on the index and believe the next bigger move is on the downside, and the index is likely to retest 7,500-7,700 on the downside over a period,” he said.

The 9,150 level is the near-term support on the downside and a breach will trigger a sharp fall.

Stocks & sectors

Sectorally, the action was seen in the S&P BSE Finance index, which was up 3.5 percen followed by the S&P BSE Bankex that was up 2.9 percent and the S&P BSE Consumer Durable index rallied 1.8 percent.

Profit-taking was visible in FMCG, which was down 0.94 percent. The S&P BSE Telecom index that ended 1.4 percent lower and the S&P BSE Healthcare index closed 1.6 percent down.

A volume spike of more than 100 percent was seen in stocks like Petronet LNG, JustDial, NMDC, PFC, and IOC.

Long Buildup was seen in stocks such as IGL, BPCL, Apollo Hospitals and Tech Mahindra.

Short Buildup was seen in stocks like Page Industries, Torrent Pharma, Petronet LNG, and Vedanta.

Stocks in News

IndusInd Bank: The stock gained more than 14 percent after the company reported its March quarter numbers. Though net profit fell 76 percent QoQ but improvement in core profitability was supported by better NIMs and steady growth, say experts.

Axis Bank: The share price jumped nearly 7 percent after the private lender said it would acquire a 29 percent stake in Max Life Insurance Company. The private sector lender is to come out with its March quarter numbers today, April 28.

Just Dial: The stock surged 11 percent after the company said that its board may consider a proposal for buyback of fully paid-up equity shares in a meeting on April 30.

Tata Motors: The share price was up 2 percent after the company said it would issue non-convertible debentures worth Rs 1,000 crore.

JK Paper: The stock jumped almost 4 percent after the board approved the buyback of its fully paid-up equity shares.

Mahindra CIE Automotive: The share price was up 5 percent after ICICI Securities upgraded the stock to buy with a revised target of Rs 100.

Adani Power:  The share was down 2 percent after the company reported Q4 loss at Rs 1,312.86 crore against profit at Rs 634.64 crore while revenue was down 8.2% at Rs 6,172 cr YoY.

Technical View

The Nifty formed a Dragon Fly Doji formation, suggesting an equal balance of power between the bulls and the bears for the day.

The Nifty not only needs to sustain above 9,250 but also needs a strong close above 9,400 to signal a directional move with a breakout, which can take the index towards 9,970.

If the Nifty fails to register a breakout and closes below 9,250, then it will slide towards 8,900.

Traders with a high-risk appetite who want to go long in anticipation of a breakout can do so with a stop below 9,250, and a breach will open up shorting opportunity, say experts.

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