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Taking Stock: No lockdown for bulls! Short covering helps Nifty climb 8,300 levels

March 25
19:06 2020

Short covering on D-Street helped bulls take out crucial resistance levels on March 25, a day ahead of F&O expiry. The S&P BSE Sensex rallied more than 1,800 points while Nifty50 reclaimed 8,300 levels.

Let’s look at the final tally on D-Street – the S&P BSE Sensex rose 1,861 points to 28,535 while the Nifty50 climbed 516 points to 8,317.

A lockdown was imposed across India by the Prime Minster on Wednesday which is likely to hit business activity and dent India GDP by about Rs 5 lakh crore, according to estimates. However, a stimulus package in the US and hopes for a stimulus package back home along with rate cut helped the sentiment.

“Indian market surged ahead today building on the gains posted yesterday. Indian market got a boost from the positive global cues. The clearing of a huge $ 2 trillion stimuli by political leaders in the US has turned the sentiments positive globally,” Gaurav Dua, Sr VP, and Head – Capital Market Strategy & Investments, Sharekhan by BNP Paribas told Moneycontrol.

“In India, the decision to take an aggressive step to fight coronavirus has also been welcomed by the markets. Today’s sharp uptick shows that any sense of stability can lead to a sudden turnaround in the direction of markets,” he said.

Sectorally, the action was seen in energy, finance, banks, consumer durables, and telecom stocks. The broader market underperformed as the S&P BSE Midcap index rose 3.5 percent while the S&P BSE Smallcap index was up 2.8 percent.

Price damage was seen in individual stocks as more than 800 stocks on the BSE hit a fresh 52-week low that includes names like 3M India, Gillette India, UltraTech Cements, PI Industries, ACC, ABB India, etc. among others.

Top Nifty gainers include names like Adani Ports, Maruti Suzuki, UPL, Kotak Mahindra Bank, and RIL which rose over 10 percent each.

Top Nifty losers include names like IndusInd Bank, Coal India, IOC, ITC, and ONGC, etc. among others.

Stocks & Sectors:

Sectorally, the action was seen in the S&P BSE Energy index which was up 10 percent, followed by the S&P BSE Finance index that gained 8.6 percent, and the Bankex was up 8.6 percent.

Volume spike was seen in stocks like NCC, Indiabulls Housing Finance, PNB, and YES Bank.

Long Buildup was seen in stocks like Apollo Hospitals, ICICI Bank, DLF, Berger Paints

Short Buildup was seen in stocks like Bandhan Bank, Havells India, and ACC.

Stocks in news:

Reliance Industries: The share price of Reliance Industries ended with gains of over 14 percent on NSE and is the top index gainer pushing the stock market higher after media reports indicated that Facebook may pick up stake in Jio.

Telecom stocks rise: Most telecom stocks traded with healthy gains giving a boost to their sectoral index on BSE on March 25. Share price of Bharti Airtel jumped 5 percent, HFCL up 4.86 percent and OnMobile Global up over a percent.

Banks rally: Bank Nifty ended with gains of 8 percent with Kotak Mahindra Bank and HDFC Bank surging over 11 percent each followed by Axis Bank, IDFC First Bank, ICICI Bank, Bank of Baroda and RBL Bank. Experts and brokerage believe RBI will go for a rate cut of at least 60 bps in the coming policy meet.

Auto stocks gain: The auto index gained over 5 percent led by Maruti Suzuki which surged over 11 percent on March 25 and was one of the top index gainer.

Technical View:

Nifty formed a bullish candle on the daily charts, closes above 5-Days EMA for the first time since 20 February.

The Nifty reversed from its new 46-months low of 7,511.10 level and recovered partial damages on back of recovery across the globe and also, due to short covering amidst F&O expiry, said Rohan Patil, Technical Analyst, Bonanza Portfolio Ltd

If the index sustains above 7,600 levels, Nifty shall eventually embark on a decent pull back rally with initial targets present around 8,750 levels.

Traders with a high-risk appetite are advised to make use of dip into the zone of 8,000 – 7,900 levels to create fresh long positions in the index with a stop below 7,700 and look for bigger targets of 8,700.

Near term outlook shall continue to remain positive unless Nifty closes below 7,600 levels and on such closedown, trend shall resume once again.

Three levels: 7714, 8376, 8700

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