Mumbai: The markets opened with a big bang this morning following yesterday’s mega announcement of a Rs. 20 lakh crore stimulus push for the economy by Prime Minister Narendra Modi. He added that, the details of the plan will be unveiled in the next few days along-with new set of rules for Lockdown 4.0.
Today, the Union Finance Minister Nirmala Sitharaman announced some of the measures from the mega stimulus package, with major focus towards MSMEs, construction, EPF, tax related and relief for struggling NBFCs. The upcoming news flow in the following days is likely to dictate the market trade. Hence, one needs to be cautious while taking home overnight positions.
Back to what happened in markets today, the BSE benchmark index, the Sensex, zoomed to a high of 32,845 – up as much as 1,474 points from the previous day in the opening trades. The BSE index, thereafter, pared more than half of the day’s gains and settled at 32,009 – up 637 points.
Among the Sensex 30 stocks, Axis Bank was the top gainer, up over 7 per cent at Rs. 414. UltraTech Cement, Larsen & Toubro, Mahindra & Mahindra, ICICI Bank, SBI, Bajaj Finance and Hero MotoCorp were the other significant gainers – up 4-6 per cent each. On the flip side, Nestle slumped over 5 per cent to Rs. 16,519 and Sun Pharma was down 2.5 per cent.
Among sectoral indices, the Capital Goods index surged over 5 per cent. The Finance, Industrials, Bankex, Power and Realty indices were up over 3 per cent each. The Healthcare and FMCG indices, were the only two indices to end with notable losses.
The market breadth was also fairly positive – out of 2,566 stocks traded on the BSE, 1,656 advanced and 730 declined. In trade today, 36 stocks touched a new 52-week high, while 79 stocks recorded a new fresh 52-week low.
While domestic news flow is largely going to impact market sentiment in the near term, technically speaking the Sensex has crossed two key hurdles in intra-day trade today. Going ahead, for the up move to strengthen the Sensex needs to sustain consistently above 32,300-odd level. By doing so, the BSE index can rally up to 32,900 and 33,700. On the other hand, in case, the Sensex is unable to sustain above 31,650-odd level, then we could witness fresh downward pressure.
As per the daily Fibonacci charts, on Thursday, the BSE Sensex may seek support around 31,650-31,535-31,425, while in case of an up move the BSE index may face resistance around 32,370-32,480-32,590.
The NSE Nifty after closing below the 20-DMA (Daily Moving Average) for the first time since April 8 yesterday, has bounced back sharply thanks to this news driven rally. For a meaningful rally to emerge, the NSE index needs to break and close above 9,670-odd level. If the index manages to do so, it can go on to test the earlier set targets of 9,970 and 10,550 – the 50 per cent and 61.8 per cent retracement of the big fall in March.
In case of a correction, the 20-DMA at 9,260 and the trend line support around 8,980-odd level can be the key support area.
Among the key momentum oscillators – the Slow Stochastic is now on the verge of giving a positive divergence, which will bode well for the bulls. The DI (Directional Index) too has flip-flopped, after giving a negative divergence yesterday, has now given a positive divergence. However, the ADX (Average Directional Index) remains tepid. The MACD (Moving Average Convergence Divergence) also remains inconclusive and the 14-day RSI (Relative Strength Index) remains in neutral mode.
To conclude, ideally one should wait on the sidelines till the current news flow gets over, before taking a fresh call on the markets.
Disclaimer: The article is for information purpose only and does not advocate any buy or sell /recommendation.
