After The Bell: Bull run continues for 3rd day; what should investors do on Thursday?

Market Outlook

Bulls remained in the driver’s seat for the third consecutive day on January 3 pushing benchmark indices to fresh record highs. The S&P BSE Sensex hit a fresh record high of 50,526 while the Nifty50 hit a high of 14,868 levels.

Let’s look at the final tally on D-Street – the S&P BSE Sensex rose 458 points to 50,255 while the Nifty50 closed with gains of 142 points to 14,789.

Sectorally, the action was seen in healthcare, telecom, power, public sector, metals, telecom, and banks while marginal profit-taking was seen in realty, and FMCG stocks.

On the broader markets front – the S&P BSE Mid-cap index rose 1.3 percent while the &P BSE Small-cap index closed with gains of 1.4 percent.

Positive global cues, persistent buying by FIIs, strong management commentary from India Inc. for the upcoming quarters as well as Budget push are some of the factors fuelling the rally in Indian markets.

“The market has got a renewed focus on segments which are likely to be most benefited by a sustainable revamp in the domestic economy,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“The broader market is outrunning the benchmark with Pharma, Infra, and PSU banks as the imminent leaders. Positive quarterly earnings is leading to a large upgrade in earnings forecast, which is also acting as a key tailwind in the rally,” he said.

Here is what experts say investors should do on February 4:

Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited

The index formed a Bullish candle on the daily scale and continues its higher highs – higher lows formation of the last three sessions.

Now, the Nifty has to continue to hold above 14,600 zones to continue its bullish momentum towards 14,850 and then 15,000 zones while support can be seen around 14,500 and then 14,400 zones.

On the options front, the maximum Put OI is placed at 14,000 followed by 13,500 strikes while maximum Call OI is placed at 15,000, followed by 16,000 strikes.

Binod Modi, Head Strategy, Reliance Securities

Growing optimism among investors after the bold and pro-growth union Budget helped the market to rebound sharply. The underlying strength of markets remains intact.

Given a sharp increase in capital expenditure along with a number of reforms to pick up investment activities, momentum in corporate earnings is expected to sustain in subsequent quarters. Further, higher fiscal stimulus in the USA, persistent soft monetary policy stance of global bankers and the weak dollar should continue to act as key tailwinds for FPIs flows.

In the near term, monetary policy outcome will be a key focus area for the market, which is broadly expected to remain favorable. Companies in infrastructure, cement, building materials, bank, and auto are likely to remain in focus.

Abhishek Chinchalkar, CMT at FYERS

Since the Union Budget on Monday, the momentum has clearly continued favouring the bulls, with every minor intraday dip being aggressively bought.

With global cues quite favourable and laggards also joining in the post-Budget rally, it looks likely that Nifty could touch 15,000 very soon.

Rohit Singre, Senior Technical Analyst at LKP Securities.

The index has witnessed a fresh breakout above 14,753 which was a previous swing high and closed a day at 14790 with gains of one percent forming a Doji sort of candle pattern on the daily chart.

Again, the index has shifted its base to 14,700-14,600 zone, if it manages to sustain the above-said levels, then buy on dip structure will be intact with keeping stop out level below 14,600 zones and if current levels are held then the index is good to touch 15k mark soon which is an immediate and strong hurdle on the higher side.

 Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.

After the initial volatility on February 03, the Nifty moved higher and crossed the all-time high of 14,753. The index registered a new all-time high of 14,868. The index is on the course to test the key psychological mark of 15,000 on the upside.

However, the hourly chart has developed a negative divergence, which means that the higher high in the index is not accompanied by a higher high in the hourly momentum indicator.

Hence, further rise towards 15,000 is unlikely to be a one-sided move and can have minor corrections in between. On the downside, 14,600-14,500 will act as a near term support zone.

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