The Indian market rallied about 1 percent on May 5 after the Reserve Bank of India (RBI) announced a raft of measures to help the financial services industry tide over the second coronavirus wave that threatens economic recovery.
RBI Governor Shaktikanta Das on May 5 announced a Rs 50,000-crore on-tap liquidity facility to ramp up health infrastructure and additional loan restructuring.
Tracking the momentum, the Sensex rallied more than 400 points, while the Nifty rose more than 100 points to reclaim 14,600 levels. The Sensex ended the day 424 points higher at 48,677, while the Nifty was up 121 points at 14,617.
Sectorally, buying was seen in healthcare, banks, metals, and IT, while mild profit-taking was seen in realty stocks.
On the broader markets front, the S&P BSE midcap index rose 1.05 percent and the smallcap index gained 0.7 percent.
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“The domestic market edged up boosted by pharma and financial stocks following RBI governor’s announcement and positive global markets. While reassuring RBI’s policy aid, the governor announced an array of support to the COVID-hit sectors through restructuring schemes and liquidity measures,” Vinod Nair, head of Research at Geojit financial services told Moneycontrol.
India’s Service PMI index reported a marginal decline in April to 54.0 from 54.6 in March 2021 due to slowing external demand and escalation of the pandemic but was expected to improve on a QoQ basis from Q2FY21, he said.
Here is what experts say investors should do on May 6:
Gaurav Ratnaparkhi, Head, Technical Research, Sharekhan by BNP Paribas
The Nifty tested the 61.8 percent retracement of the rise from 14,151 to 15,044 in the last couple of sessions. The selling pressure got absorbed near the key Fibonacci level of 14,492. Thereon, the index took a leap on the upside on May 5.
On the way up, the index tried to cross the key hourly moving averages, which were acting as hurdles from the last two-three sessions. On the daily chart, the Nifty formed an Inside bar for which the breakout level on the upside is at 14,724.
The overall structure shows that the benchmark index is preparing for the next leg of the recovery. It looks set to test 15,000 on the upside in the short term. The swing low of 14,416 will act as a reversal level for the bullish stance.
Mohit Nigam, Head, PMS, Hem Securities
Benchmark indices extended the gains after RBI’s announcements directed mostly towards COVID-hit sectors, ample liquidity and softening of yields.
Comments from treasury secretary Janet Yellen about rising yields have made US markets slightly volatile, which can affect the Indian market in the next one or two trading sessions. Good corporate results so far and a possible drop in COVID-19 cases in the next few days will provide support to the market.
Sumeet Bagadia, Executive Director, Choice Broking
The Nifty took good support at 100-day simple moving average and sustained above Middle Bollinger Band formation, which indicates further upside move.
Moreover, the recent Hammer Candlestick pattern on the daily chart is a sign of a bullish trend. The Stochastic oscillator has indicated positive crossover, which supports a bullish trend for the near term.
The Nifty is holding support at 14,450, while an upside resistance seems at 14,860 levels.
Ajit Mishra, VP-Research, Religare Broking Ltd
We feel the timely intervention by the RBI has offered some relief to participants amid the prevailing uncertainty. However, it failed to trigger a decisive move in the benchmark indices and we might see further consolidation.
On the flip side, there’s no shortage of trading opportunities on the stock-specific front, so participants should align their positions accordingly while keeping a check on leveraged trades.
Shrikant Chouhan, Executive Vice President (Equity Technical Research), Kotak Securities
We are of the view that in the short run 14,500/48,250 should be the sacrosanct support area for the positional traders. We can expect a continuation of uptrend above these levels to 14,750/49,200. A further upside can lift the indices to 14,820/49,850.
On the flip side, trading below 14,500/48,250 could possibly open one more correction wave to 14,450- 14,410/ 48,000-47,750.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
