Indian benchmark indices made a smart comeback on September 21 after two days of selling, supported by positive trends in global markets.
At close, the Sensex was up 514.34 points, or 0.88 percent at 59,005.27 and the Nifty was up 165.10 points, or 0.95 percent, at 17,562.
“Technically, the Nifty50 has recovered from the immediate support around 17,270 levels and sustained above 9-days SMA & Middle Bollinger Band formation, which indicates further strength for the next trading session,” said Sachin Gupta, AVP, Research at Choice Broking.
On an hourly chart, the Nifty index has given a breakout of falling channel formation and showed positive crossover in stochastic and RSI, which supports the upward trend.
“At present, Nifty has its crucial support at 17,250 levels, while resistance lies at 17,650 levels,” Gupta said.
JSW Steel, Bajaj Finance, ONGC, IndusInd Bank and Bajaj Finserv were the top Nifty gainers. Maruti Suzuki, BPCL, Hero MotoCorp, Bajaj Auto and Nestle were among the top losers.
The BSE midcap index rose nearly a percent, while the smallcap index was up 0.2 percent.
Except auto, all sectoral indices ended in the green, with FMCG, IT, pharma and metal indices up 1-2.4 percent.
Stocks & sectors
On the BSE, the realty index rose 3.5 percent and IT and metal indices were up 1.5-2.5 percent. Some selling was, however, seen in auto and power stocks.
Among individual stocks, a volume spike of more than 100 percent was seen in Escorts, Godrej Properties and Hindustan Aeronautics.
Long buildup was seen in Escorts, Godrej Properties and Canara Bank, while short buildup was seen in Hindustan Aeronautics, Polycab and Gujarat Gas.
More than 150 stocks, including Pidilite Industries, Kolte-Patil Developers, JSW Energy, HCL Technologies and Bajaj Finance, hit a 52-week high on the BSE.
Here are the factors behind today’s rally:
1 European markets on the up
Despite weak US and Asian markets, positive European markets provided support to the Indian indices.
The European indices FTSE, CAC, DAX were up over 1 percent each after the European Central Bank policymakers said the recent inflation surge was temporary.
2 Dow Futures up over 300 points
US stock futures also bounced a day after global markets were roiled by concerns that the potential default by Evergrande, the world’s biggest property developer, could hurt China’s real estate sector, banks and the global economy.
3 Short covering in most beaten-down sectors
The rally was also supported by beaten-down sectors, with metal indices rallying over 2 percent after tanking nearly 7 percent in the previous session.
Also, capital goods, oil & gas, IT and realty were seen the buying interest and gained 0.5-3.5 percent.
Technical View
The Nifty formed a bullish hammer kind of candle on the daily scale and closed with gains of around 165 points.
“Now it has to continue to hold above 17,500 zones, for an up move towards 17,650 and 17,777 zones, whereas support is placed at 17,350 and 17,272 zones,” said Chandan Taparia, Vice President, Analyst-Derivatives, Motilal Oswal Financial Services.
Outlook for September 22
Rohit Singre, Senior Technical Analyst, LKP Securities
Sharp recovery was witnessed from a good support zone and the Nifty closed the day at 17,562 with gains of one percent. It formed a bullish candle on the daily chart after two successive bearish candles.
Going forwards, 17,600-17,660 will act as resistance zone. One can lock long gains around said levels and supports are placed at 17,500-17,430 zone. Any dip near the levels will be a buying opportunity, with immediate stop out below 17,500. The overall range is coming in between 17,300 and 17,800.
Ashis Biswas, Head, Technical Research, CapitalVia Global Research Limited
The level of 17,450-17,500 will be an important support zone for the market to stay positive in the short term. If the Nifty holds 17,450-17,500, it can move to 17,850.
Momentum indicators like RSI and MACD suggest that the positive momentum is likely to continue.
Shrikant Chouhan, Head, Equity Research (Retail), Kotak Securities
After two days of sharp correction, the benchmark indices witnessed a sharp pullback rally. The Nifty found support at 17,326 to reverse the falling trend.
Technically, the texture of the sharp reversal formation near the 10-day SMA suggests further uptrend from the current level.
While the short-term trend still looks up, uncertain global market conditions could see the Nifty in the 17,650-17,450 range.
For the day traders, as long as the index stays above 17,450, the pullback rally is likely to continue to 17,600-17,650-1,7680 levels. If the index slips below 17,430, the uptrend would be vulnerable.
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