Nifty back above 11,700; small midcaps underperform

The Indian market rallied for the fifth consecutive day to close in the green on October 7, staving off negative global cues after US President Donald Trump abruptly called off until after the election the talks with Democratic lawmakers on a second coronavirus relief package.

The rally pushed the benchmark indices towards crucial resistance levels— the S&P BSE Sensex came close to 40,000 while the Nifty50 reclaimed 11,700 for the first time since February 25.

The Sensex ended the day 304 points higher at 39,878 while the Nifty50 closed with gains of 76 points to 11,738.

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“Markets recovered quickly in the morning trade and traded in the green throughout the day led by autos ahead of the RBI policy. Although the broader market was a bit lacklustre, we did see sustained buying in cement and select pharma counters during the day,” S Ranganathan, Head of Research at LKP Securities, said.

Sectorally, the action was seen in consumer durables, energy and auto indices while profit-taking was visible in metals, realty and power indices.

On the broader markets front, the S&P BSE midcap index fell 0.6 percent, while the S&P BSE smallcap index was down 0.4 percent.

Top Nifty gainers included Maruti Suzuki, Hero MotoCorp and Titan.

Top Nifty losers included Tata Motors, BPCL and Bajaj Finance.

Stocks & Sectors

Sectorally, the action was seen in the S&P BSE consumer durables index which was up 1.7 percent. The energy index gained 1.5 percent and the auto index closed with gains of 1.3 percent.

On the losing front, the S&P BSE metal index fell 2.9 percent, the realty index 1.6 percent and the power index was down 1.4 percent.

A volume spike of more than 100 percent was seen in stocks like ACC, Vedanta, GMR Infra and ONGC.

Long buildup was seen in stocks like Titan Company, TCS and Apollo Hospitals.

Short buildup was seen in stocks like MGL, BHEL and UBL.

More than 100 stocks on the BSE hit a fresh 52-week high. These include Hero MotoCorp, TCS, Dr Lal PathLabs and Asian Paints.

Technical View

The Nifty formed a bullish candle on the daily charts

The market appears to have stretched on the upside in the near term with successive positive closes five sessions.

If the Nifty remains range-bound with a negative bias in the next session, upsides may remain capped at around 11,794.

“Though there is no immediate threat of short-term correction, more weakness can be expected if the Nifty closes below 11,629 levels,” Mazhar Mohammad of said.

“For the time, traders are advised to remain neutral on the long side but intraday traders with a high-risk appetite can consider shorting if the Nifty opens near 11,770 levels with a stop of 11,810 and can look for a modest target of 11,690,” he said.