After The Bell: Banks shine post SC verdict; what should investors do on Wednesday?

Market Outlook

Indian market bounced back on March 23 after closing flat in the previous trading session, supported by a rally in the banking space post the Supreme Court verdict on the moratorium.

Bulls took control of D-Street pushing the Nifty50 above 14,800 while the S&P BSE Sensex closed above 50,000.

Let’s look at the final tally on D-Street – the S&P BSE Sensex rose 280 points to 50,051 while the Nifty50 closed 78 points higher at 14,814.

In terms of sectors, buying was seen in banks, industrials, energy, and realty stocks. The Nifty Mid-cap index rose nearly 1 percent while the S&P BSE Small-cap index gained 0.7 percent. The NiftyBank rose 1.7 percent at 34,184.

“Markets continue to trade volatile and ended half a percent higher. After a sluggish opening, the benchmark oscillated in a range initially however the SC judgment on the moratorium case lifted sentiment as the day progressed,” Ajit Mishra, VP – Research, Religare Broking Ltd told Moneycontrol.

“We feel banking might help the index to inch further higher but negative sentiment due to the rise in the COVID cases and mixed global cues would cap the upside. We reiterate our cautious approach and suggest preferring hedged positions,” he said.

The Supreme Court has finally lifted the interim stay on banks for classifying loans that were standard as on August 31 as NPAs (non-performing assets). With the SC lifting the stay, banks have now more clarity on asset classification.

SC ruling is a relief for the banking sector as a whole since banks have been unable to classify accounts as per their actual performance since September last year.

Also Read: Banks finally get to tag bad loans as bad as SC lifts interim stay on asset classification

Here is what experts suggest investors should do on March 24:

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

The Nifty50 formed a Bullish candle on a daily scale and negated the formation of lower highs of the last six trading sessions.

Now, the index has to hold above 14,750 zones to witness an up move towards 14,900 and 15,000 zones while on the downside, immediate support exists at 14,700 then 14,600 zones.

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

The market remained volatile throughout the day but finally closed above 14,800/50,000 levels. The 50-day moving average was a major hurdle for the market and is positive for the medium-term trend of the market.

Based on it the Nifty/Sensex could move closer to 14,950 to 15,000 (50,500/50,700) levels. Surprisingly, support is still at 14,570/49250 levels.

The formation of a double bottom in the Bank Nifty is working positively. The Bank Nifty is expected to move closer to 35,000. Maintain a stop loss of 33,850.

Rohit Singre, Senior Technical Analyst at LKP Securities.

The Nifty index managed to close a day above the 14,800 zone with gains of half percent and formed a small bullish candle on the daily chart.

The index has formed a broader range of 14,500 on the downside and 15,300 on the higher side and going forward also we may see prices to trade in the same range.

Recently, prices touched lower band and started moving northwards if current levels are held then we may see the next leg of rally towards previous swing highs.

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

The Nifty witnessed continuation in the recovery on March 23. It had recently taken support near the lower end of a sideways channel. Over there it had formed a Piercing Line – a bullish candlestick pattern.

In the last session, it had formed an Inside bar on the daily chart. On Tuesday, the bar pattern broke out on the upside.

The overall structure shows that the index is moving from the lower end of the consolidation range towards the upper end, which is near 15,000. On the other hand, 14,707 will act as crucial near-term support.

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