After The Bell: Indices end with handsome gains after banks rally; what should investors do on Thursday?

Market Outlook

Indian equities logged sharp gains in the last hours of the trade once trading resumed after being halted due to a technical snag on the National Stock Exchange (NSE) on February 24.

Gains were led by private bank stocks such as Axis Bank, HDFC Bank and ICICI Bank. Finance Minister Nirmala Sitharaman’s statement that private banks can now participate in government business boosted bank stocks.

Sensex closed 1030 points, or 2.07 percent, higher at 50,781.69 while Nifty jumped 274 points or 1.86 percent to 14,982. BSE Midcap and Smallcap indices closed 0.77 percent and 1.08 percent higher, respectively.

“Technical glitch did not impact domestic market sentiment though volatility was high with a positive prejudice, in the first session. During the extra session, the market gathered more strength and hugely outperforming the global peers, triggered by squaring-off F&O positions a day ahead of the prefixed monthly expiry date,” said Vinod Nair, Head of Research at Geojit Financial Services.

Here is what experts say investors should do on February 25:

Ajit Mishra, VP – Research, Religare Broking Ltd

Markets managed to end on a strong note in an unusual session. Sentiment boosted in the extended hours, taking note of the news that the Finance Minister allowed the government businesses to transact with private banks. Consequently, the Nifty index ended with strong gains of nearly 2 percent. Amongst the sectors, banking was the top outperformer ending higher by 3.7 percent followed by Capital Goods which ended higher by 1.8 percent. The broader markets too participated as both BSE Midcap and Smallcap ended higher by 0.8 percent and 1.1 percent.

We expect volatility to remain high on Thursday due to the scheduled derivatives expiry of February month contracts. It would be prudent to avoid naked leveraged positions in early trades and prefer hedged bets.

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

Nifty index opened above 14,700 zones and continued its momentum on a positive note for most part of the session. Index picked up sharply in the second part of the session and managed to hit psychological 15,000 mark. It closed the day with gains of around 275 points. It formed a strong Bullish candle on daily scale and negated its formation of lower highs of the last five trading sessions. Now, it has to continue to hold above 14,900 zones to extend its move towards 15,150 then 15,250 zones while on the downside immediate support exists at 14,850 and 14,700 levels.

Bank Nifty opened gap up and witnessed quick buying and positive action in all the banking stocks. It made intraday high of 36,567 and ended the day with massive gains of more than 1300 points. It formed a strong Bullish candle on daily scale and negated its formation of lower highs – lower lows of the last five sessions. Now it has to continue to hold above 36,000 zones to witness an up move towards 37,000 and 37,250 zones while on the downside support exists at 36,000 and 35,700 zones.

Deepak Jasani, Head of Retail Research, HDFC Securities

Nifty has bounced up well after the 5 day fall seen recently. Although this rise is to be seen in the backdrop of the widespread weakness across Asia, the momentum in the indices could take the Nifty up to 15,039-15,132 band in the near term. However for the time being it seems as a correction of the recent fall and not a new uptrend.

Nirav Karkera, Head of Research at Fisdom

Considering the duration of the outage and the fact that this has happened right before the expiry. The next session will probably be a chaotic one as a fair number of mispricing events are observed and traders indulge in frantic trading. However, given the buoyant liquidity, markets will realign quickly. Notably, the next session will be especially tough on traders with covered orders who will take among the biggest raps when the scrips’ prices reopen directly at points jumping over or below the assigned stop-loss levels.

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