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After The Bell: Another day, another high! Here’s what investors should do on Thursday

Experts are of the view that given the fact that we are trading around record highs some consolidation or profit booking cannot be ruled out.

November 11, 2020 / 04:38 PM IST

Bears made an attempt to control D-Street in afternoon trade on Wednesday, but bulls managed to reclaim lost ground and closed in the green for the 8th consecutive session in a row.

The S&P BSE Sensex hit a record high of 43,708.47 while the Nifty50 rose to a high above 12,700 for the first time in history at 12,769.75.

Let’s look at the final tally on D-Street on November 11 – the S&P BSE Sensex rose 316 points to 43,593 while the Nifty50 rose 118 points to close at 12,749.

Experts are of the view that given the fact that we are trading around record highs some consolidation or profit booking cannot be ruled out. News on a vaccine for COVID as well as stimulus hopes is powering rally in equity markets across the globe, they say.

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"Domestic market displayed positivity largely owing to sectors like Pharma, Metals and IT while some volatility was exhibited in the broad market. The latest update on the Covid vaccine has lifted the spirit of western markets with Europe showing a fast recovery in anticipation of the rapid roll-out,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“In the US, markets witnessed a shift in investment from technology-based to cyclical & small caps companies in-order to take benefit from a reviving economy. We feel that the world’s financial market is getting a lot of new money, which was on-hold during the US election period while the actual outcome is much better,” he said.

Nair further added that markets have rapidly reached to premium level with over-optimism supported by easy money, caution is advised in the short-term, as production and distribution wise the real benefit will take time.

Here is what experts think that investors should do on November 12:

Abhishek Chinchalkar of FYERS

The Nifty had broken out of a Bullish Flag pattern last week, the price objective of which was 12770. The index exactly met this price objective today before heading south. Meanwhile, profit booking was also seen in Bank Nifty, a few points below the key resistance level of 29080.

While the overall bias still points to the upside, from a very short-term perspective, caution would be warranted given how swift the recent up legs have been. For now, 12770 and 29080 are the key hurdles for Nifty and Bank Nifty, respectively. Until they are surpassed, a minor 2-3 day correction cannot be ruled out.

Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities

The Nifty has gained significantly in the short term and currently trades at all-time high levels. We continue to believe the medium-term trend is positive while short term volatility is expected. Since the recent rise has been vertical we expect some correction to set in to provide comfortable entry points.We expect some consolidation in the near term. Momentum support for the month is seen at 11240 above which traders can adopt the buy on dips strategy.

Auto stocks look attractive at current levels for aggressive buying while in Metal and Banking the risk-reward proposition is skewed towards risk. From the defensive space, select Pharma and FMCG look attractive.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.

The bulls maintained their upper hand on the Nifty for the eighth straight session. After a positive start the index witnessed a dip in the first half of the session however it found support near the lower end of a rising channel on the hourly chart as well as near the 20 hours moving average.

The index witnessed a fresh round of buying near these parameters resulting in a leap in the second half. The index is a stone's throw away from its equality target for the current up move, which is near 12850.

Over there the index can take a pause or a breather before heading further north.

Arjun Yash Mahajan, Head - Institutional Business at Reliance Securities.

Domestic markets remained upbeat and extended gain for the eighth consecutive day as positive sentiments among investors following clarity of coronavirus vaccine by BioNTech-Pfizer and strong 2QFY21 corporate earnings persist.

While the market witnessed some amount of volatility today led by profit booking in some of the heavyweights, a sharp rebound in Pharma, Metals, IT, and Auto stocks supported the market rally.

As the market has already witnessed a sharp run-up and valuations appear to be quite stretched at the current level, profit-booking at these levels cannot be ruled out and therefore investors should be cautious at these levels.

We continue to believe that a strong earnings rebound still looks to be difficult given ambiguity over CAPEX cycle recovery.

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

The Nifty index opened positive and continued its bullish momentum after an early volatile swing and made a new lifetime high of 12769 levels. Bulls continued to celebrate the new scale and settled the day with gains of 118 points. It formed a Bullish candle with a long lower shadow on a daily scale which indicates bulls are holding a tight grip in the market.

The Nifty continued its higher high - higher lows formation for seven straight sessions and witnessed winning streak for eight sessions in a row.

Now, the index has to continue to hold above 12550 zones to witness an up move towards 12900-13000 zones while on the downside major support exists at 12430 zones.

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.

Kshitij Anand is the Editor Markets at Moneycontrol.
first published: Nov 11, 2020 04:38 pm

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