After The Bell: Mcap of BSE companies hits Rs 200 lakh crore, what should investors do on Friday?

Market Outlook

Indian shares rose for the fourth day running on February 4 despite a muted start but the bulls managed to defend crucial support near 14,700 on the Nifty50 and pushed the index in the green with gains of more than 100 points.

The S&P BSE Sensex hit a fresh high of 50,687, while the Nifty50 climbed above 14,900 for the first time to hit a high of 14,913.

Four straight days of consecutive rise pushed the average market capitalisation of the BSE-listed companies by over Rs 200 lakh crore on February 4. More than Rs 14 lakh crore of market cap has been added since the Budget Day.

Let’s look at the final tally on D-Street–the Sensex rose 358 points to 50,614, while the Nifty50 closed with gains of 105 points to 14,895 on.

Sectorally, the action was seen in the public sector, power, FMCG, banks, capital goods and auto, while some profit-taking was seen in telecom, consumer durables and IT index.

All eyes will be on the outcome of the Reserve Bank of India’s monetary policy committee (MPC) on February 5. Most experts feel that it will be a status quo and the central bank will continue to remain accommodative.

“The market turned positive from its weak start and traded near lifetime highs following a recovery in banking stocks. Driven by the hope of privatisation & NPA restructuring, PSU banks were at the forefront,” Vinod Nair, Head of Research at Geojit Financial Services, said.

“FMCG, media, and metal were also in focus with the broad-based rally. We cannot expect more from the on-going Monetary Policy Committee meeting, considering the encouraging economic outlook than to maintain a status quo and accommodative stance. While they will work on measures to normalize the gap between the repo rate and market yield,” he said.

Here is what experts say investors should do on February 5:

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

The Nifty formed a bullish candle on a daily scale and continued its higher highs-higher lows formation of the last four sessions.

Now, the Nifty has to continue to hold above 14,750 zones to continue its bullish momentum towards 15,000 and then 15,250, while support can be seen around 14,600 and 14,500 zones.

Rohit Singre, Senior Technical Analyst at LKP Securities

One more positive session and the index closed on a fresh high at 14888 with a gain of nearly one percent and formed a bullish candle on the daily chart.

Going forward, 14,750 has become a strong base in the Nifty. One can consider this as a make or break level. A break below it can see some more profit booking but above it, the index may march towards the 15k mark.

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

Technically, post strong uptrend rally, the index has formed breakout continuation formation near an important resistance level. The texture of charts suggest the short-term trend is still up but an intraday correction is not ruled out if the indices trade below 14,800/50,425.

For the trend-following traders, 14,800/50,425 should be the sacrosanct level to watch. Trading below the same, we can expect quick correction of up to 14750-14700/50,000-49,810.

On the flip side, 14,900/50,800 would be the immediate hurdle for the day traders, above the same, we could expect further uptrend till 15,000-15,035 /51,300-51,650.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities

The short-term trend of the Nifty continues to be positive. Present close above the long-term trend line resistance of around 14800 levels could eventually have a further positive impact on the market.

The next upside target to be watched is 15475, which is 1.618 percent Fibonacci extension (taken from the swing high of Jan 2020 and March 20 low). Immediate support is placed at 14,750.

Ajit Mishra, VP – Research, Religare Broking Ltd

The outcome of the MPC’s monetary policy review meeting, scheduled for February 5, will be closely watched. The majority expect status quo on interest rates but the commentary on inflation and economic outlook would be important.

We reiterate our view to focus on the selection of stocks and continuing with the “buy-on-dips” approach. The Nifty has the potential to test 15,200.

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