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After The Bell: Profit-booking on D-St; here’s what investors should do on Wednesday

The Nifty is moving in a narrow range of 11,800-11,950 levels. Above 12,050, the Nifty can move to 12,200 in a short period of time, say analysts.
Oct 20, 2020 / 06:12 PM IST

The Indian market closed in the green third day in a row on October 20 but saw profit-taking at higher levels. The Nifty50 failed to hold on to 11,900 towards the close of the trade.

The S&P BSE Sensex rose 112 points to 40,544 while the Nifty50 gained 23 points to close at 11,896.

Sectorally, action was seen in realty, telecom, IT, consumer discretionary, and consumer durable stocks while oil & gas, public sector, energy and power stocks saw profit-taking.

Though the Nifty closed in the green, profit booking near 11,950 suggested a limited upside, experts said. For the bulls to take control, the Nifty must close above the swing high of 12,025-12,050 recorded on October 15.

“American stock futures were trading higher throughout the day as investors remained optimistic for a deal in stimulus talk. Based on the overall market formation, the Nifty must cross the 1,2050 levels otherwise another round of profit-booking or tired bulls liquidation is more likely below the level of 11,800,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities told Moneycontrol.

“The Nifty is moving in a narrow range of 11,800 and 11,950 levels. Above the level of 12,050, the Nifty could move to 12,200 in a short period of time,” he said.

Here is what experts have to say on what investors should do on October 21:

Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After forming the bearish engulfing pattern on October 15, the market has showing upside bounce in the last three sessions could be a positive indication for the short term.

Unless the high of that engulfing pattern is not surpassed above 12025, the strong upside momentum could be ruled out. The larger degree positive pattern like higher tops and bottoms is visible on the Nifty as per the weekly chart.

Though the Nifty is now placed near the higher highs, there is no confirmation of any higher top reversal yet, as per the weekly chart.

Hence, we are unlikely to see a sharp weakness. Any minor declines could be a buy-on-dips opportunity for the short term.

The short-term uptrend remains intact with range bound action. The market could retest the crucial upper resistance of 12,000-12,050 in the next few sessions. Immediate support to be watched at 11,780.

Arjun Mahajan, Head, Institutional Business, Reliance Securities

HCL Technologies, Tech Mahindra, Bharti Airtel and Asian Paints were among the top gainers, while Britannia, ONGC, and GAIL were among the top losers. We believe investors will keenly following Prime Minister Narendra Modi's address to the nation.

Progress on fiscal stimulus in the US will be crucial for global as well as domestic markets.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas

The Nifty continued to recover for the third straight session. On the way up, the index crossed 61.8 percent retracement of the last week's fall but paused near the 78.6 percent retracement mark, which is near 11,950.

There are a few hurdles in the range of 11,950-12,025 that the bulls need to cross to set the stage for a significant upside. Failure to cross these barriers would keep the index in the consolidation phase.

On the downside, 11,850-11,820 is an immediate support zone that can keep the upside intact in the near term.

Ajit Mishra, VP - Research, Religare Broking Ltd  

Markets are closely following global cues and indications are still mixed from that front. Despite the positive bias, we might continue to see volatile swings so traders should prefer hedged positions and maintain their focus on the selection of stocks.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not that 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: Oct 20, 2020 06:12 pm

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