Uptrend may continue

The market gained sharply as investors’ focus turned to the earnings season with the Sensex ending 304.90 points, or 0.85 per cent, to settle at 36,239.62, while the Nifty 50 Index rose 94.35 points, or 0.87 per cent, to settle at 10,947.25, its highest closing level since 1 February 2018.

The BSE Mid-Cap Index rose 1.01 per cent and Small-Cap rose 1.04 per cent. The market breadth was positive with 1,676 shares rising and 962 shares falling.

Among the sectoral indices on the BSE, mainly Energy (up 2.01 per cent), Realty (1.79 per cent), Telecom (1.75), Metal (1.58), Utilities (1.30), Basic Materials (1.09) and  Oil & Gas (1.06) outperformed the Sensex.

Technical view

Mustafa Nadeem, CEO, Epic Research, said: “The Nifty is poised to retest the previous all-time highs as it breaks out of a contracting triangle with a breakaway gap. On the daily chart, long congestion/ consolidation, which was observed in a contracting triangle for past few days, has been successfully breached by the bulls while the cherry on the cake was having a breakaway gap along with the breakout of this pattern. The two continuous gaps have given some strength to the bulls while in the last trading session a higher volume participation indicates the internal strength very well.

“The breadth of the market has improved fairly well if not significantly in the last few sessions.

“Secondly, the contribution from other sectors, heavyweights and indices are positive, such as Metals, Auto, Financials and Nifty Bank. Thirdly and most importantly, we have observed this particular rally may be led by heavyweights like SBI, Maruti, Reliance, HDFC, Infosys.

“The derivative data has shown a significant rise in long built up positions at higher strikes of 11,000-11,100 while writing has been observed at 10,700-10,800 strikes, indicating more strength for the bulls.

Market view

Vinod Nair, head of research, Geojit Financial Services, said: “The market rallied to a five-month high as fading trade war woes and shift in attention to corporate earnings supported investor’s sentiment.Any revival in earnings growth will give scope for re-rating in valuation for many mid-cap stocks. However, rupee depreciated and bond yield rose.”

Columnist: 
Ashwin J Punnen