Sensex scales 49,000 with a big rally. But why are analysts cautious? – Mint

Indian stock markets surged today to close at all-time highs following strong earnings from TCS. The blue-chip NSE Nifty 50 index rose 0.96% to 14,484, led by gains in IT stocks. Sensex gained about 490 points to 49,269, its first close above 49,000. The Nifty IT index rose 3.3%, with TCS climbing 1.8%. IT majors Wipro, HCL Tech and Infosys were among the top Nifty gainers, advancing between 4% and 6%.

Tata Motors Ltd’s shares ended nearly 12% higher to be the top gainer among the Nifty stocks. Shares of D-Mart operator Avenue Supermarts rose 2.8% after the company reported a 16.4% jump in December-quarter profit.

However, the broader markets underperformed with both BSE midcap and smallcap indices ending flat.

Among the losers, Tata Steel fell 2.5% to be the biggest loser among the Nifty50 stocks. Among other stocks, RIL and Bajaj Finance were down about 2%.

“Today the market closed at the highest point of the day despite the weakness in US stock futures, rise in the dollar index, and crude prices are at an level of $55. It seems that the market has gained momentum due to the bright possibilities of bold announcements in the forthcoming Union Budget,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.

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Here is what analysts said on today’s market performance:

Deepak Jasani, Head of Retail Research, HDFC Securities

“Nifty has closed the day with another almost 1% gain on Jan 11. Positive news flow including results are pushing indices and stocks higher. A negative advance decline ratio however is a sign of caution after such a steep rise. Typically distribution happens in such times of euphoria, which gets noticed a few days later.”

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

“Another day with tremendous gains for the market. During the day, the market fell three times to 14400/48950 levels, but found huge support at those levels to scale higher. Technically, the market has left an exhaustion gap between today’s lows and yesterday’s highs. It is an indecisive candlestick pattern at the top of the current movement and traders should take some profit at current levels until the Nifty / Sensex crosses do not cross the 14520/49370 level. Support exists at 14440/49000 and 14380/48900. One should be careful when adding long positions at high level.”

Vinod Nair, Head of Research at Geojit Financial services

“Improved outlook for 3rd quarter earnings along with strong global cues helped Sensex to breach 49,000 mark. The rally in the market was led by the IT sector backed by firm earnings results. However, small and mid-cap stocks were under pressure. Hopes of a new US stimulus to be unveiled this week created an upbeat movement in Wall Street while profit booking is seen in the European markets. This ongoing rally is being fueled by strong Q3 earnings preview, foreign fund inflow and optimism around Union Budget 2021”

Rohit Singre, Senior Technical Analyst at LKP Securities.

“Index opened a day with gap and managed to hold the bullish stream for a day and closed a day near good hurdle zone of 14500 with gains of nearly one per cent forming a dragonfly kind of Doji candle pattern on the daily chart. Going forwards index has shifted its support to 14400-14300 zone if managed to hold above-said levels we may see the index to march towards 14550-14600 zone which is immediate hurdle on the higher side”

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