After the Bell: Smart recovery caps losses, what should investors do on Thursday?

Market Outlook

Indian market closed in the red for the second consecutive day in a row on February 10 pushing benchmark indices lower, but a smart bounce back towards the close of the day capped the losses. This suggests that bulls have not left the party yet.

The S&P BSE Sensex which was down nearly 500 points from the previous close of 51,329 during the day, closed with a marginal loss of about 20 points. The Nifty50 which broke below 15,000 also managed to bounce back to close just a shade below 15,100.

Let’s look at the final tally on D-Street – the S&P BSE Sensex fell 19 points to 51,309 while the Nifty50 closed with a loss of 2.80 points at 15,106.50.

Sectorally, the action was seen in realty, consumer durable, consumer discretionary, and auto stocks while profit-taking was visible in telecom, banks, capital goods and the public sector.

Experts are of the view that the index has good support near 14,700-14,800; hence, any dips towards these crucial levels could be used as a buying opportunity.

“Much on the expected lines, the benchmark traded volatile in a range and settled almost unchanged. Meanwhile, movement on the broader front saved the day for the traders as both midcap and smallcap indices ended with decent gains,” Ajit Mishra, VP – Research, Religare Broking Ltd told Moneycontrol.

“We’re seeing a healthy pause after the budget up move and it’s more of a time-wise consolidation so far. We suggest keeping a close watch on the banking index for cues on the further directional move in Nifty,” he said.

Mishra further added that earnings announcements from some of the prominent companies like ACC, Ashok Leyland and ITC will be in focus on Thursday. Amid all, we reiterate our bullish bias and advise continuing with the “buy on dips” approach.

Here is what experts think that investors should do on February 11:

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

Post the 1500/5600 points sharp rally in Nifty & Sensex, the indices are trading within a narrow range, which indicates bulls may have started feeling discomfort to go further long near 15250/51810.

But technically, a fresh uptrend rally is possible only after 15270/51900. For the next few trading sessions, 15270/51900 should act as a trend decider level, above which we can expect a breakout rally towards 15315-15350/52500-53000.

However, trading below 15045 /51300 could possibly open one more correction wave up to 14880/ 50800-50500 levels.

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

The Nifty formed a Doji candle on a daily scale with a long lower shadow indicating dips were being bought in the market. Now, Nifty has to hold above 15000 to continue its bullish momentum towards 15200 and 15250 zones while on the downside major support can be seen around 14850 and 14750 zones.

Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited

The market manages to hold above the Nifty 50 Index support level of 15000. The technical factors are aligned to support a range-bound market movement in the coming week.

Therefore, the short-term traders should use the rally to exit while buying any dip towards the support level around 14900-14800. The level of 15230-15250 act as short-term resistance.

The momentum indicators like RSI, MACD to show divergence, supporting our view that the market is likely to take a pause around this level and stay in a range

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

The Nifty opened on a positive note however faced selling pressure as the day progressed. The index came down to fill up the gap area of 15041-15014. The hourly chart shows that the index moved lower to test the hourly lower Bollinger Band where the selling was absorbed.

As a result, the Nifty recovered from the 15000 mark & posted a marginal negative close. The overall structure shows that the index can continue to consolidate near 15000-15250 before heading higher. Once the consolidation is done the index can head for the short term target of 15450

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