After Monday’s markets rally, will Tuesday see a correction?

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Stock markets have started the week on an optimistic note led by supportive global cues. Benchmark indices, Sensex and Nifty ended over 1% higher on Monday led by gains in metals, banks and financial stocks. A healthy management commentary by ICICI Bank, post its March quarter results announcement, fuelled rally across the financial sector lifted the sentiments. That apart, medical support from across the globe, to help India tackle the Covid-19 outbreak, along with acceleration of the mass vaccination drive supported sentiments on Dalal Street.

Pharma trails

Except for pharma, all other sectoral indices ended in the green. Investors booked profit in the pharma stocks after a healthy rally over the past week.

In the broader market space, BSE Midcap and Smallcap indices rose 0.6% and 0.9%, respectively.

Axis Bank, UltraTech Cement, ICICI Bank, JSW Steel and Grasim Industries were among top gainers on the Nifty, while losers included Cipla, Britannia Industries, HCL Technologies, BPCL and HDFC Bank.

On the one hand, ICICI Bank witnessed a jump of 3.6% to settle the day at Rs 590, M&M Finance fell  9% after reporting the lowest AUM growth in five years.

Vinod Nair, Head of Research at Geojit Financial Services said, “With the support of strong global markets, accumulation in the domestic market increased as the rate of infection is slowing down with a flattening path.”

He also said that the buying interest was broad-based with a hope that we are nearing the peak of infection. However, market may remain volatile in the coming days as covid cases continue to be high, then there is April F&O expiry and cues from the upcoming FOMC meeting.

Here’s what experts say investors must do on Tuesday

Shrikant Chouhan, EVP, Equity Technical Research, Kotak Securities

Technically, the market has formed strong reversal formation near 14,400 levels, which is broadly positive, but the intraday charts suggest bulls may take cautious stance near 14,525 levels. The texture of the reversal pattern suggest further uptrend is not ruled out, if the index succeeds to trade above 14,535. Above the same we can expect continuation of uptrend wave up to 14,600-14,625 . On the flip side, trading below 14,410 could possibly open one more leg of correction wave till 14,300 levels.

Manish Shah, Founder, Niftytriggers.com

It seems that Thursday’s bullish piercing line is giving way to bullish sentiments in the market. But we still need additional confirmation of a change in trend which on the last available data point is absent.

Nifty caught the gap at 14,550-14,570 and there the rally stopped for the day. What we need is a strong conviction candle that has a wide range and moves above the resistance at 14,450-14,470 points.

Nifty has immediate resistance at 14,550-14,4570 a break above this and the index should see a move up towards 14700. On the lower side 14,350-14,320 should act as a support. For any substantial move on the upside to emerge we need to see Nifty Breakout out of the pattern. Till this time expect the market to move listlessly for some more time.

Ajit Mishra, VP – Research, Religare Broking

Upbeat global cues combined with supportive earnings are helping the index to hold at higher levels despite COVID challenges. Also, the recent news of various countries extending help to India in the COVID flight further boosting the sentiment. We remain cautiously optimistic as volatility is likely to remain high on the back of derivative expiry and upcoming earnings announcements. Banking, metal and pharma are showing tremendous resilience and should be preferred for long trades on dips.