Nifty, Sensex get bank, energy boost; analysts say buy on dips

Except Nifty FMCG and IT, all Nifty sectoral indices were trading higher with gains led by banking and energy stocks.

The Indian equity benchmark Sensex and Nifty were trading higher on January 20 morning, with banking and energy names leading the gains.

Along with third-quarter results, Bank of Japan and European Central Bank’s rate decision, and US GDP data are expected to drive the market, analysts said.

At 9.40 am, the Sensex was up 114.43 points, or 0.16 percent, at 71,797, and the Nifty was up 37.40 points, or 0.17 percent, at 21,660. About 1,970 shares advanced, 916 declined and 78 were unchanged.

Broader markets outperformed the benchmarks. The BSE midcap and smallcap indices rose 0.64 percent and 0.54 percent higher.

Except Nifty FMCG and IT, all Nifty sectoral indices were trading higher, with banking and energy stocks seeing the biggest gains.

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The recent correction in the market has not changed the underlying uptrend, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

"FII selling is being countered by sustained DII and retail buying. And the strength of the economy is providing fundamental support to the market," he said.

The selling by foreign institutional investors is not strong enough to pull down the market hugely, unlike in the past when FIIs used to call the shots, he said.

The change is an opportunity for investors to buy quality stocks that come under short-term pressure due to FII selling, Vijayakumar said.

Investors need to buy high-quality stocks in performing sectors since many unproven stocks in the broader market are flying high on hopes rather than on fundamentals or strong prospects, he added.

"Hyper speculative/ trading activity has pushed many mid and small-cap stocks to frothy valuations. Correction in these stocks is only a matter of time," the analyst said.

Technical View

The Nifty reclaimed its short-term moving average but lacks decisiveness. “We reiterate our cautious view citing the prevailing underperformance of the banking and eyeing the 21,700-21,850 zone to act as a hurdle," Ajit Mishra, SVP-Technical Research, Religare Broking Ltd, said.

Traders should continue with a stock-specific approach and prefer hedged trades.

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The daily chart shows that Bank Nifty is trading below the 20,50, and 100-day exponential moving averages (EMAs), indicating bearish pressure in the market, Mandar Bhojane, Research Analyst, Choice Broking, said.

It is holding support at 45,500, suggesting a degree of price stability.

"A crucial development to watch for is if the price manages to surpass the 46,400 level. If this occurs, it has the potential to propel the Bank Nifty towards the 47,200 mark in the coming days," Bhojane said.

On the downside, 45,400 acts as immediate support, providing a buffer against further declines. Crucial support is at 45,000 and its breach can signal increased bearish momentum, he added.

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