Markets extend record run to fourth straight session; what should you do on Wednesday?
Experts say, Nifty could continue to rise gradually but the broader markets could take time to complete their correction
Domestic benchmark share indices closed at record highs on Tuesday, continuing its winning run for the fourth consecutive session. This was despite the markets starting yesterday’s session on a weak note amid muted global cues. The session was marred by a whole lot of volatility with the indices shifting between gains and losses throughout. Last hour buying led benchmarks to clock in record closing highs.
Gains were led by defensive sectors like IT, Pharma and FMCG.
The Sensex closed at 55,792.27, up 209.69 points or 0.38%, while the Nifty was at 16,614.60, up 51.55 points or 0.31%. Metals, banks closed in red, while IT, pharma, and FMCG were top gainers. S&P BSE Information Technology was the biggest sectoral gainer, up 2.18%
Tata Consumer, Sun Pharma, Power Grid and Cipla were among other blue-chip top performers. On the other hand, HDFC Bank was the top laggard, down 1.07 per cent. ICICI Bank, Maruti, Tata Motors and Eicher Motor were among other losers.
Vinod Nair, Head of Research at Geojit Financial Services said, “Domestic indices swung between gains and losses in a volatile session amidst weakened global markets. Due to concerns over the rising global infection rate and tighter government regulations for the Chinese internet sector, global markets continued to fan investor worries. However, backed by solid support from defensive sectors like IT, FMCG and Pharma, frontline indices gained ground to end the day on a flat trend. ”
At the interbank foreign exchange market, the domestic currency opened flat at 74.23 against the American currency but later slipped to close at 74.35.
Here’s how experts see markets trading on Wednesday
Ashis Biswas, Head of Technical Research at CapitalVia Global Research
Ajit Mishra, VP – Research, Religare Broking
Markets remained volatile for yet another session but managed to end marginally higher. The recent surge in the index lacks decisiveness due to prevailing underperformance from the banking pack, which holds considerable weightage. Besides, the continuous profit-taking in the broader indices is also keeping the participants on the edge. Considering the scenario, it’s prudent to limit naked leveraged positions and maintain caution in the selection of stocks.
Deepak Jasani, Head of Retail Research, HDFC Securities
Advance decline ratio had improved in the morning of Aug 17 compared to the previous day, but late selling in the broader markets took it down again in the negative in line with the recent numbers. Nifty recovered smartly on Aug 17 from the intra day lows, but the broader market is yet to bounce up. Sector rotation is being seen with IT and FMCG rising while Metals and Telecom undergoing correction. Nifty could continue to rise gradually but the broader markets could take time to complete their correction.
Shrikant Chouhan, EVP, Equity Technical Research, Kotak Securities
Markets maintained their upward trajectory thanks to a sharp rally in IT stocks, as investors bet on recovery on the back of states relaxing lockdowns and opening up their economies. Traders may prefer to take some profits near the 16,700 resistance level. As long as Nifty trades above 16,520, the uptrend formation could continue up to 16,675-16,720 levels. On the flip side, trading below 16,520 could trigger a quicker intraday correction up to 16,460-16,410 levels.