After two days of more than 1 percent fall, bulls managed to reclaim control on D-Street and pushed the Nifty50 back above 14,500 levels on a closing basis which is a positive sign.
The S&P BSE Sensex rallied by more than 800 points while the Nifty50 rose more than 230 points in a single trading session.
Let’s look at the final tally on D-Street – the S&P BSE Sensex rose 834 points to 49,398 while the Nifty50 closed with gains of 239 points to 14,521.
Sectors like realty, metals, power, capital goods, industrials, finance, and banks were in focus. On the broader markets front – the S&P BSE Midcap index rose 2.3 percent while the S&P BSE Small-cap closed with gains of 1.6 percent.
"Bulls took control after two days of massive selloff, tracking positive cues from Asian markets and in expectation of a bigger US stimulus to keep the liquidity alive. Buying was seen across sectors with realty and PSU Banks outshining,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.
“The current market will get a further boost by foreign inflow if additional US stimulus kicks in. However, recent volatility in the market has increased due to concerns over high valuations and bond yields. So, investors should be watchful,” he said.
Here is what experts think that investors should do on January 20:
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
The market has formed complete reversal formation by closing above the highest of the previous day, which was at 14,459/49,122. Today, all the sectors closed in positive territory.
The market breadth was extremely encouraging. An unusual surge in the Hang Seng helped other Asian markets to trade higher. Along with Asian markets, today’s performance of US markets would decide the next course of action for our markets.
The market is heading for 14,580/49,600 levels, which is a crucial hurdle point for the market. On the decisive break of 14,580/49,600 levels, it would result in retesting of 14,650/49,800 levels, which is an all-time highest level.
On the downside, 14,450/49,100 and 14,350/48,800 would be major supports. The focus should be on Commodities and Pharmaceutical stocks.
Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas
The Nifty witnessed smart recovery on January 19 after declining for the last couple of sessions. It had a sharp retracement of the recent fall and retraced more than 61.8% of the fall. The index is heading towards the 78.6% retracement mark, which is near 14,560.
The overall structure indicates that the Nifty can still consolidate further before commencing a larger rally. However, the range has shifted higher to 14,200-14,600 where the index can consolidate over the next few sessions.
Ajit Mishra, VP - Research, Religare Broking Ltd
Going ahead, earnings and global cues would remain on the participants’ radar. Besides, we’re also seeing noticeable buzz across the sectors in the run-up to Budget. We feel it would be prudent for the markets to spend some time around the current levels.
Meanwhile, there’ll be no shortage of trading and investment opportunities, thanks to the prevailing earnings season and the upcoming budget. Amid all, we suggest not to go overboard and stick to the quality names and accumulate them on dips.
Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited
The Nifty index formed a Bullish candle on a daily scale and negated its formation of lower tops - lower bottoms from the last two sessions.
Now, it has to continue to hold above 14,450 zones to extend its move towards a lifetime high of 14,653 then 14,750 zones while on the downside major support exists at 14,350 and 14,200 levels.
Ashis Biswas, Head of Technical at CapitalVia Global Research Limited
The market witnessed a strong pullback rally after a few sessions of continuous correction, while sustaining and closing above 14,400 would be a key factor in the market for the rally to continue.
The market is aligned to be in a range-bound movement between the levels of 14,180-14,680. Our research suggests, a decisive breakout above the zone of 14,680-14,700 could lead to improvement in market breadth, and a rally till the levels of 14,850-14,870.
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