Market resumes upward march; what should investors do on Wednesday?

A day after losing more than 2 percent, Indian equity benchmarks the Sensex and the Nifty resumed their upward march on September 1 on a volatile day of trading.

Markets swung on a day the Supreme Court gave mobile service providers 10 years to pay adjusted gross revenue  (AGR) dues, the new margin norms kicked in and the market came to terms with Q1GDP numbers that were released the previous evening.

The AGR verdict and announcement of auto sales numbers eased some pressure in the middle but lack of follow-up buying capped the upside.

The Sensex closed 272 points, or 0.71 percent, higher at 38,900.80 and the Nifty settled 83 points, or 0.73 percent, higher at 11,470.25.

Midcaps outperformed as the sectoral index on BSE closed 1.16 percent higher. The BSE smallcap index closed 0.54 percent up.

Among the sectors, the telecom index jumped 3.81 percent after the AGR verdict while the metal pack jumped 3.35 percent.

Power and healthcare rose 2.56 percent and 1.94 percent. IT, oil & gas and teck ended in the red.

Also read: Gainers & Losers: 10 stocks that moved the most on September 1

We have collated views of experts on what investors should do on September 2 when the market resumes trading:

Vinod Nair, Head of Research at Geojit Financial Services

Indian markets exhibited heightened volatility following the publishing of GDP data and SC ruling in the AGR case. Global cues were positive on Chinese factory data that indicated an increase in demand.

Liquidity, driven by high FII inflows in August, has provided good support to the market, despite concerns over high valuations in some sectors and stocks.

The market is expecting a slow uptick in economic activity, which has resulted in stock-specific moves, where there is earnings visibility. Investors need to be prepared to handle volatility in the near-term.

Chandan Taparia, Derivatives & Technical Analyst, Motilal Oswal

The Nifty formed a Doji, an inside bar and a Harami Cross formation on the daily scale as it traded inside the range of the last session with a highly volatile scenario.

Multiple candle formations at key junctures indicate that bulls will not give up easily even after a sharp bear attack on August 31.

Now, the index has established immediate support near 11,333 and below that, only weakness could be seen towards 11,200 then 11,111. A hold above 11,550 can again give the bulls the upper hand to drive the index towards 11,650 and 11,750-11,800 zones.

Ajit Mishra, VP-Research, Religare Broking

After the dismal GDP data, market participants are now hoping for another stimulus package from the government.

Participants will also keep a close watch on India-China border tensions and global markets for cues.

Indications are in the favour of consolidation and we can see the next leg of decline below 11,340.

Defensives such as pharma and FMCG tend to do well in such a scenario, so traders should plan their positions accordingly.

Aamar Deo Singh, Head Advisory, Angel Broking

Markets recovered from sharp correction in the previous session and the bulls managed to hold their ground, with the Nifty closing at 11,470, up 82 points.

Advances and declines are evenly poised, clearly reflecting the strong tussle between the bears and the bulls.

The sharp contraction in GDP at -23.9 percent, which was higher than expected, is something investors are coming to terms with. Most of the Asian markets have also closed the in green, which also supported the market.

Crucial support for Nifty is at around 11,300, whereas immediate resistance is seen at 11,600 levels. For any meaningful upside, the index has to sustain this level.

Deepak Jasani, Head of Retail Research, HDFC Securities

On September 1, Indian equity benchmarks partly recovered the previous day’s losses, ending a volatile trading session with gains.

Volumes on the NSE were in line with the recent average though there were fears of a drop in volumes with the new margin system kicking in.

Metals, pharma, FMCG and media indices ended positive while IT and banks underperformed.

The Supreme Court’s AGR order brought relief to the telecom sector.

Amid few macro and judicial developments, Indian markets managed to post a rise. More clarity about the impact of these factors will be seen over the next few days when there are fewer developments to track and discount.