After The Bell: Indices recover in late trade; what should investors do on Thursday?

Market Outlook

Sensex slipped 85.40 points or 0.16% to 51,849.48 on June 2 while the Nifty closed 1.30 points or 0.01% higher at 15,576.20.

“Indices staged a smart recovery in late afternoon trade after being in the red for the most part of the day. Broader markets too displayed resilience as we saw interesting buying in state-owned banks, auto ancillaries and in unlocking themes across sectors,” said S Ranganathan, Head of Research at LKP securities.

Nifty auto, metal, energy and PSU Bank indices rose 1-3 percent. BSE Midcap and Smallcap indices added over 1 percent each.

UPL, Tata Steel, SBI Life Insurance, IndusInd Bank and Adani Ports were among major gainers on the Nifty, while losers included ITC, Tech Mahindra, Axis Bank, Asian Paints and Kotak Mahindra Bank.

Here’s what experts think investors should do on June 3:

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

Nifty index opened negative and witnessed some profit booking after the rally of the last few sessions. It faced some pressure towards 15,500 zones but the last hour of the session saw a strong pullback and the index closed on flattish note above 15,550 zones. Technically, it formed a Bullish hammer sort of candle on daily scale which indicates that every small decline is being bought in the market. Now, it has to hold above 15,500 zones to witness an up move towards fresh life time high of 15,750 zones while on the downside, support exists at 15,431 and 15,300 zones.

Bank Nifty opened negative and even though it faced some resistance in the opening tick, the second half of the session saw strength. The banking index took support at 35,000 zones and closed the session with marginal gains of 36 points. It formed a Bullish candle on daily scale but negated its formation of higher highs of the last four sessions. Now it has to hold above 35,250 zones to witness an up move towards 35,750 and 36,000 zones while on the downside, support exists at 35,000 and 34,750 levels.

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

Markets ended at almost unchanged levels in a lacklustre trade, but it seems that a corrective pattern has been completed. The 15,460 level would act as significant support for Nifty and Sensex if it breaks the level it could fall to 15,430/15,330. The index would have closed below 15,500 today if not for gains in banks and auto sectors.

Index giant Reliance Industries was also the top performer and could close above Rs 2,200 after 60 days. Nifty could once again hit 15,650 and 15,750 levels and one can buy the index between 15,550/15,500 levels with a stop loss at 15460.

Mazhar Mohammad, Founder & Chief Market Strategist at

Nifty50 smartly recoiled from the intraday low of 15,459 levels before before signing off the session with a marginal gain which resulted in the bullish candle. Albeit this recovery, near term trend shall remain sideways between 15,650 – 15,400 levels unless Nifty registers a close above 15,660 levels. For a directional move, it need to emerge out of this range with a fresh breakout in either of the directions.

If bulls manages to push the index beyond 15,660 on closing basis then a higher target close to 15,850 can be expected where a close below 15,374 can trigger a corrective downswing with initial targets towards 15,200 levels. Hence, traders are advised to remain neutral on index but considering strongly positive advance-decline ratio, stock-specific opportunities can be considered.

Ajit Mishra, VP – Research, Religare Broking

Markets traded volatile in a range and ended unchanged, extending yesterday’s pause. Initially, the bias was slightly on the negative side amid weak global cues and profit-taking in banking, IT and FMCG majors further pushed the index lower in the first half. However, in the second half, it pared all its losses and closed flat as healthy buying was seen across auto, power and healthcare stocks. Consequently, the Nifty ended at 15,576 levels. The broader markets, on the other hand, outperformed and ended with strong gains in the range of 1.3-1.8 percent.

We reiterate our view to focus on stock-specific trading opportunities across sectors as the benchmark may continue to trade volatile in a range on Thursday due to scheduled weekly expiry. Needless to say, the bias is clearly on the positive side so traders should avoid contrarian trades in anticipation of a reversal.

S Hariharan, Head – Sales Trading, Emkay Global Financial Services

Retail long positioning in the market has continued to increase over the last fortnight to a lifetime high, while rich futures basis also points to elevated degree of leverage. On the other hand, the recent rally has been broad-based with mid-cap and small-cap indices making fresh highs ahead of Nifty.

Given India’s outperformance over EMs & Asia over the last month, foreign flows can be expected to stay somewhat muted for the month ahead. At a sectoral level, Financials & IT have been displaying relative strength while momentum in Autos & Metals sectors has been waning.

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