After The Bell: D-St @ 6-month high, what should investors do on Thursday?

A decisive move above 11,600-11,650 can pull Nifty towards the next upside of 11,900-12,000 in the near term, experts say.

August 26, 2020 / 05:27 PM IST
Representative Image

Representative Image


Indian market rose to a six-month high on August 26, powered by action in autos, banks, and energy stocks. The S&P BSE Sensex reclaimed 39,000 while the Nifty50 closed above 11,500.

The S&P BSE Sensex ended the day at 39,073, 230 points higher, while the Nifty50 rallied 77 points to close at 11,549.

The market breadth too ended strongly on the advancing side, thanks to the buoyancy in midcap and smallcap space. Investors should remain cautious as the Nifty was trading near crucial resistance levels that could be a cause of a concern for the bulls, experts said.

The market is likely to remain volatile on August 27 amid August F&O expiry. Going by the options data, maximum Put OI is placed at 11,500 followed by 11,000 strikes while maximum Call OI is at 11500 followed by 11600 strikes.

Options data suggests a trading range between 11,450 and 11,650 for the August expiry day, experts said. India VIX remained flat to down by 0.09 percent at 19.30 levels.

Close

“The short-term trend of the Nifty continues to be positive. The next upside resistance to be watched is 11,650 for the next few sessions. Immediate supports to be watched is 11,450. A decisive/sustainable move above 11,600-11,650 can pull the Nifty towards the next upside of 11,900-12,000 in the near term,” Nagaraj Shetti, Technical Research Analyst, HDFC Securities told Moneycontrol.

“The crucial overhead resistance of intermediate uptrend line (resistance as per the concept of change in polarity) at 11,500 has been broken on the upside this week, but there is evidence of a lack of strength in the upside momentum at market highs recently,” he said.

Shetti added that this action could bother the bulls in sustaining the upside breakout. Often such a lack of upside momentum during upside breakouts tend to result in a false upside breakout of the underlying.

Also Read: Gainers & Losers: 10 stocks that moved the most on August 26

We have collated views of experts on what investors should do on August 27 when the market resumes trading:

Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities

We continue to remain positive on the broader markets and expect a further upside towards 11,800-12,000 going ahead; trend support is seen at 10,900.

Volatility is expected to increase and any meaningful dip will be a strong buying opportunity. Banking stocks look attractive while metals and auto stocks can be accumulated in corrections.

Abhishek Bansal, founder chairman, Abans group

On the domestic front, the rally in auto stocks such as Hero MotoCorp, Bajaj Auto and TVS Motors, supported the upmove after the Finance Minister Nirmala Sitharaman said the GST council would consider lowering taxes on two-wheelers as they were neither luxury goods nor sin goods.

The Nifty-50 index is expected to remain firm while trading above the support of 20-day EMA at 11,278, and the 50-day EMA at 10,882. An immediate resistance level can be seen around 11,576-11,626.

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

The Nifty formed a small-bodied bullish candle on the daily scale prior to the monthly F&O expiry and continued to form higher highs-higher lows for the fourth consecutive session.

Supports are gradually shifting higher, with the momentum in the banking counters which gives scope for further upside. The major trend of the index is positive and a follow-up buying activity is supporting the fresh breakout to commence the next leg of the rally.

The index has to hold above 11,450 for an upmove towards 11,600 and 11,750. On the downside, the medium-term support shifted to 11,400-11,350 zones.

Sumeet Bagadia, Executive Director at Choice Broking

Technically, the Nifty looks very good and we may see a further upside movement. At the present level, the downside support comes at 11,400 while upside resistance comes at 11,780.

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.

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