After The Bell: Indices make good gains after 2 days of battering, what should investors do on Tuesday?

Market Outlook

After two straight days of losses, Indian markets made a good start to the April series as the Sensex closed 568.38 points, or 1.17 percent, higher at 49,008.50 and the Nifty gained 182.40 points, or 1.27 percent, at 14,507.30 on March 26.

All the sectoral indices ended in the green, with the Nifty metal index rising 3.6 percent. BSE midcap and smallcap indices gained over a percent each.

Tata Steel, Bajaj Finserv, Asian Paints, Hindalco Industries and Tata Motors were among the major gainers on the Nifty, while the losers included UPL, Eicher Motors, Power Grid Corp, IndusInd Bank and ITC.

All the S&P BSE sectoral indices ended in the green, with the metal index adding 3.5 percent, while capital goods, auto, FMCG and realty indices rose over a percent each.

Here is what experts suggest investors should do on March 30:

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

The market has formed a bullish harami pattern. The market stopped at a large support area the previous day and formed a bullish pattern on March 26, indicating that the coming week may be positive for the market. On a weekly basis, the market has completed a corrective pattern and the Nifty could see a level of 14,750 or 14,900 until it breaks to 14,250.

The Bank Nifty is also expected to move to 34,700 above the resistance at 33,700. The focus should be on FMCG and Capital Goods. During the week, FIIs had sold shares to the tune of Rs 6,000 crore till March 25, while domestic institutions bought for over Rs 3,000 crore. During the week, the dollar index was the biggest factor that dragged the sentiment of the market. In the coming week, the trend of the market would again largely depend on the dollar index.

Ajit Mishra, VP-Research, Religare Broking

Markets witnessed a breather after the recent fall and settled with decent gains on favourable global cues. After a gap-up opening, the benchmark gradually inched higher but profit-taking in the latter half trimmed the gains. Finally, the Nifty ended with healthy gains of 1.3 percent at 14,507. Broader indices, midcap and smallcap, too, ended with healthy gains of 1.7 percent and 1.3 percent, respectively. On the sector front, all the indices ended in the green, with metals, consumer durables and telecom gaining the most.

We feel this bounce is just a pause and traders should maintain extra caution until we see some stability in the move. Investors, on the other hand, can now start accumulating quality stocks as we have already seen a decent correction.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas

The Nifty witnessed a bounce back on March 26 after declining sharply in the last couple of sessions. In terms of price patterns, the index seems to have formed a Wedge pattern. On March 25, it reached the lower end of the pattern and thereon, the index took a leap on March 26. The Fibonacci retracement shows that the index retraced 61.8 percent of the entire February rise. The Golden Ratio mark induced a fresh round of buying in the market. Thus the index is expected to move up further towards its key daily moving averages that are near 14,700-14,800.

Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities

In light of favourable global cues, Indian benchmark indices recouped most of the losses of the previous day. At the close, the Nifty was up by 193 points or 1.35 percent at 14518. After opening with a gap, the Nifty remained range-bound through the day, though intraday dips found buyers on every occasion.

The index is facing stiff resistance at around 14,800-14,700 zone and a convincing move beyond this resistance zone would open a further upside. On dips, 14,250 levels could offer support to the market.

Mazhar Mohammad, Founder & Chief Market Strategist,

The Nifty50 witnessed a sharp bounce, perhaps owing to oversold levels, which almost erased the previous session’s losses. The bulls, however, failed to capitalise on a strong opening without any incremental intraday gains, which resulted in a Doji formation on the daily charts. A small bearish candle was formed for the second consecutive time on weekly charts.

If the bulls manage to push the index beyond 14573 levels in the next session, then the Nifty can test its 20-day EMA (14,756), whereas on the downside, 14,414 shall be an important support as a close below the level could resume weakness with initial targets placed at around 14264.

Considering a weak technical setup, traders are advised to wait for some more consolidation before initiating trade on the long side, whereas intraday shorting can be considered if the index slips below 14400 for a modest target of 14,300.

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