Indices climb crucial resistance levels; 50 stocks in BSE500 gain 10-30% in just 5 sessions

Given the fact that Nifty is trading near crucial resistance levels, some consolidation cannot be ruled out, say experts.

August 29, 2020 / 05:31 PM IST
Representative Image

Representative Image

Benchmark indices rallied more than 2 percent each for the week ended August 28 pushing Sensex above 39,000 while Nifty50 climbed to 11,600 levels.

The broader market performed in line with benchmark indices. The S&P BSE Sensex rose 2.6 percent while the Nifty50 gained 2.4 percent for the week ended August 29 compared to 1.9 percent gain in the S&P BSE Mid-cap index and about 2.5 percent rally in the S&P BSE Small-cap index in the same period.

As many as 50 stocks in the S&P BSE 500 index rose 10-30% in just 5 trading sessions, which include City Union Bank, Tata Motors, Vodafone Idea, Adani Green, Blue Star, IndusInd Bank and Dish TV.

Selective action was seen in small & mid-cap space. US Fed commentary, buying by FIIs, strong August series helped the momentum to push Nifty50 beyond 11,600 levels. Experts are of the view that the current rally could extend towards 11,700-12,000 levels in the September series.

BSE 500 29 Aug

Close

Foreign institutional investors poured in nearly Rs 6,000 crore in the cash segment of equity markets while so far in the month of August they have poured in more than Rs 19000 cr, data showed.

“During the week, the market witnessed many gap-up openings indicating exuberance in the overall market sentiment. Small and midcap indices led the market optimism making the rally more broad-based which was aided mainly by huge FPI inflows,” Umesh Mehta, Head of Research, Samco Group told Moneycontrol.

“For the month of August 2020, FPI equity inflows have reached the highest levels of nearly USD 6 billion which happens to be the highest monthly number in history. And this led to the price action in the week gone by,” he said.

In terms of sector banking index rallied more than 10 percent in the week gone by, followed by the S&P BSE Realty index which gained more than 4 percent, and the S&P BSE Auto index rallied a little more than 2 percent.

Technical View:

The Nifty50 settled the week at 11648, up 277 points, or 2.4 percent. Broader market continued to outperform, as Nifty Midcap, Small Cap indices surged 2.3 percent and 3.7 percent, respectively.

Sectorally, Bank Nifty outshone throughout the week, meanwhile, FMCG and energy took a breather. Experts are of the view that given the fact that Nifty is trading near crucial resistance levels, some consolidation cannot be ruled out.

On the upside, a break above 11700 could well take the index towards 12000 levels while on the downside support is seen near 11300-11400 levels. Any dips should be used as a buying opportunity as long as Nifty hold 11400 levels.

“Going ahead, sustainability above 11700 mark supported by multi-sector participation would be key monitorable to revise the target towards the psychological mark of 12000 in the coming weeks. The absence of such broad-based participation would lead to consolidation in the 11700-11300 range amid stock-specific action as index have gained 5% in the past two weeks,” Dharmesh Shah, Head – Technical, ICICI direct told Moneycontrol.

“Our extended target of 12000 is based on following observations: a) during ongoing up move off June low of 9544, internal rallies were of ~800 points. Thus projection of 800 points up move from last week’s low (11144) is placed at 11944 b) negative gap seen on 24th February 2020 in the range of 12080-12012,” he said.

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: Aug 29, 2020 10:59 am

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