After The Bell: Market near 5-month high, what should investors do on Wednesday?

As odds favour the bulls, traders should create fresh longs, with an initial target of 11,500 and a stop below 11,150.

July 28, 2020 / 05:30 PM IST

Indian market touched a near five-month high on July 28, tracking strong trends in other Asian markets that were trading higher on hopes of a further US stimulus that could cushion the economic impact of the coronavirus outbreak.

Markets in Europe and Asia booked gains as investors wagered the US Federal Reserve would reaffirm its dovish stance this week and a tolerance for higher inflation, a Reuters report said.

US Senate Republicans also proposed a $1-trillion coronavirus aid package as the virus pandemic has killed nearly 150,000 people in the country, the report added.

Tracking the momentum, the Sensex rallied 558 points to close at 38,492 while the Nifty50 reclaimed 11,300 levels, ending the day 168 points higher.

“Much attention will be focused on a two-day meeting for the Federal Reserve that begins Tuesday as Congress debates another stimulus package. Markets have broken out of near term trading range and could be headed higher in the short term,” Deepak Jasani, Head Retail Research, HDFC Securities, told Moneycontrol.

Also Read: Taking Stock: Market recover 2-days of losses; Sensex back above 38,000

Close

Technically, the index broke out from the consolidation range as it surpassed 11,250 levels and if the momentum continues on Wednesday, it can head towards 11,400-11,500 levels.

“The trade can remain positively biased as long as the Nifty sustains above 11,151 levels. In that scenario, the Nifty can make an attempt to bridge the bearish gap present in the zone of 11,384–11,536 levels registered on February 27 which happens to be the first breakaway gap which unleashed the spiralling downward move owing to COVID crisis,” Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

However, at this juncture, the only hope for the bears is the fact that the Nifty is moving inside a well-defined ascending channel for the last 24 sessions and unless the bulls manage a close above the said channel, whose resistance point for next session is placed at 11390 levels,” he said.

Odds favoured the bulls and traders should create fresh longs with initial targets of 11,500 with a stop below 11,150, Mohammad said.

Also Read: Gainers & losers: 10 stocks that moved the most on July 28

We have collated views of experts on what investors should do on July 29 when the market resumes trading:

Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After 11,245, the next hurdle will be another opening down gap of February 28, which is placed around 11,385-11,535 levels. At the same time, long-term charts like weekly/monthly timeframe can offer key long-term resistance as per the change in polarity at around 11,300-11,350.

The short-term trend of the Nifty is positive. A sustainable move above 11,250-11,300 is likely to open further upside until 11,550 in a quick period of time. Any weakness can find support at 11,230-11,200 in the short term.

Sumeet Bagadia, Executive Director at Choice Broking

Technically, the way the Nifty has been trading on the daily chart, it seems that we may see a further upside movement up to 11,400-11,450 level, while support comes at 11,100.

Investors should keep a close eye on upcoming quarterly earnings, development related to coronavirus vaccine and the geopolitical situation.

Ajit Mishra, VP - Research, Religare Broking Ltd

Going ahead, the Fed meet outcome (on July 29) would be one of the key events to watch out for. Besides, the key economic data points would provide more clarity on economic recovery.

On the domestic front, earnings announcements from companies and auto sales numbers would be on investors’ radar. We advise continuing with a positive yet cautious approach as the Nifty is inching closer to the next hurdle at 11,350 levels.

Arun Kumar, Market Strategist, Reliance Securities

The Nifty broke out from its narrow trading range between 11,050 and 11,240 on a closing basis. The overall breadth also improved after two negative days. The index has a scope to rally towards 11,360-11,500 in the near term.

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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