After The Bell: Market snaps 6-day rally; what should investors do on Wednesday?

Market Outlook

Indian market snapped a 6-day winning streak and closed flat after hitting a record high on February 9. The S&P BSE Sensex touched a record high of 51,835 while the Nifty50 touched a high of 15,257 during the day.

Let’s look at the final tally on D-Street – the S&P BSE Sensex fell 19 points to 51,329 while the Nifty50 closed 6.5 points lower at 15,109.

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

Experts are of the view that indices closed flat due to selling pressure at higher levels. On the downside, 15,000 on the Nifty50 will be important support and a breach of which could fuel further selling pressure.

“Nifty remained volatile as it traded in a wider range of 150 points but ended on a flattish note. It formed a small Bodied Candle on the daily scale but continues its higher highs – higher lows formation of the last seven sessions,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited told Moneycontrol.

“Now, the Nifty has to hold above 15,000 to continue its bullish momentum towards 15,250 and 15,500 zones while on the downside major support can be seen around 14,750 zones,” he said.

Here is what experts say investors should do on February 10:

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

We are of the view that the market is overstretched and last-hour selling pressure indicated a strong possibility of quick intraday correction from the current levels. Technically, the index has formed a Hammer kind of candlestick pattern which clearly indicates indecisiveness between bulls and bears.

For the next few trading sessions, 15,250/51,800 would be the key resistance level, trading below the same we can expect intraday correction up to 15,000-14,950/51,000-50,500.

On the flip side, if index succeeds in trading above 15,250 /51,800 then uptrend continuation rally will likely continue till 15,335-15,365/ 52,200-52,500.”

Ajit Mishra, VP – Research, Religare Broking Ltd

Markets ended almost unchanged in a volatile trading session, taking a breather after a strong surge. Initially, supportive global cues led to a firm start however profit-taking in the later half trimmed all the gains.

We might see some consolidation in the index and it would be healthy. We thus advise using intermediate corrective moves to accumulate quality stocks on dips and avoid contrarian trades.

Ashis Biswas, Head of Technical at CapitalVia Global Research Limited

The market extended the gain further after the decisive break from the Nifty 50 Index level of 15,000. The market has already attained the projected level of 15,230-15,250. The level of 15,230-15,250 acts as short-term resistance.

The momentum indicators like RSI, MACD to show divergence, supporting our view that the market is likely to pause around this level.

Binod Modi, Head Strategy at Reliance Securities.

The Union Budget has given an undisputed reason to investors to cheer, which helped the market to see the northward journey this month.

A sharp rise in capital expenditures and bold reforms to stimulate investment and consumption activities indicate the sustainability of the recent rebound in corporate earnings.

Additionally, a strong indication by the RBI to support the government’s pro-growth strategy by keeping interest rates at lower levels and enabling the government to meet huge targeted borrowing programs also offers comfort.

A low-interest cycle is the most important factor to drive corporate earnings, which has also started showing positive impacts on realty markets, which is aiding other ancillary sectors as well.

However, as markets are already at all-time highs with rich valuations, the market may see some amount of pullback in the near term. Investors must be cautious at these levels and focus on quality companies with sound earnings potential and margins of safety.

Rohit Singre, Senior Technical Analyst at LKP Securities

Nifty has witnessed a profit booking in the last hour of the session and closed a day at 15,110 with minimal loss.

Going forward, 15,000 will act as supreme support. Any dip near the 15,000-mark will be again buying opportunity with keeping overall stop out levels below 15,000.

If the index managed to hold the above-said levels then again we may see some bounce in the index towards 15,255 odd levels which is an immediate and strong hurdle on the higher side.

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