After The Bell: Auto top sectoral gainer, here’s what investors should do on Wednesday

May 18
19:03 2021

The Indian market closed in the green for the third day running on May 18, supported by positive global cues and a decline in India’s coronavirus cases boosted market sentiment.

The bulls pushed the benchmark indices to a near two-month high. The Sensex closed above 50,000 for the first time since April 1 and the Nifty50 ended above 15,000 for the first time since March 12.

The S&P BSE Sensex rose 612 points to 50,193, while the Nifty closed with gains of 184 points to 15,108.

Technically, as long as the Nifty holds above 15000, the bulls can push the index towards 15,200-15,300, say experts.

A steady decline in fresh Covid cases does suggest that infection may have peaked, kindling hopes of easing of restrictions. Sectors that can gain from the lifting of curbs include autos, consumer durable and banking, which were the top sectoral gainers.

 The BSE auto index rose 3.1 percent followed by consumer discretionary that was up 2.5 percent. The Nifty Bank closed with gains of 1.3 percent.

The fall in Covid cases and the prediction of normal monsoon are likely to improve consumer sentiment towards purchasing new vehicles, Mitul Shah, Head of Research at Reliance Securities said.

“Automobile stocks started recovering from recent lows. Strong performance delivered by most automobile companies in 4QFY21 is also one of the key boosters. Ashok Leyland is the top gainer as MHCV up cycle has already started and the outlook for CVs remains positive for the next two years. Ashok Leyland remains our top buy idea,” he said.

The global market put aside worries of inflation in the US markets as the Fed officials eased concerns about an early rate hike but will look to the minutes of the Fed’s April meeting for further cues.

In anticipation of a rapid fall in Covid cases, the implication of corporate results and favourable Asian markets, the Indian market made a strong comeback after the three months of muted performance, Vinod Nair, Head of Research at Geojit Financial Services said.

“Global futures indices rose ahead of the release of the Fed’s policy minutes, which is due on Wednesday, in anticipation of accommodative outlook,” he added.

Here’s what experts think that investors should do on Wednesday:

Sumeet Bagadia, Executive Director, Choice Broking

Technically, the Nifty has given a Falling Channel breakout and sustained above the prior resistance levels on the daily chart that suggests bullish strength for the upcoming sessions.

The index has also taken good support at 100-DMA and settled above Ichimoku Cloud formation, which indicates a continued upside move for the long term.

The Stochastic oscillator and MACD also suggest a positive crossover on the daily time frame. At present, the Nifty is holding support at 14,950, while an upside resistance seems to be at 15,300.

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

The Nifty managed to surpass its falling supply trend line and started to form higher highs-higher lows from the last two sessions.

Now, it has to hold above 15,000 to witness an up move towards 15,200 then 15,350, while on the downside, support exists at 14,900 and 14,800.

Gaurav Ratnaparkhi, Head, Technical Research, Sharekhan by BNP Paribas

After multiple failed attempts to cross the psychologically important level of 15000 in the last few weeks, the index finally managed to cross the barrier on May 18. With a breakaway gap, the Nifty crossed a falling trendline as well as a couple of swing highs and the 61.8 percent retracement of the February-April decline.

The index is now on course to test the all-time high of 15,431. The rally towards the high is unlikely to be a one-sided journey. There can be intermittent pauses and consolidation on the way up.

The next hurdle is at 15,160, which is near 78.6 percent retracement of the February-April fall. The index can witness a brief consolidation near this key Fibonacci level before extending higher. On the flip side, any minor dip is likely to find support near 15,000-14,940.

Rohit Singre, Senior Technical Analyst, LKP Securities

Going forwards, 15000-14900 will act as a strong base. If the index stays above it, the structure will be quite positive. Any dip near the level will again be a buying opportunity, with overall stop out level below 14900 and resistance near 15,200-15,300.

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