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Sensex closes above 32K, Nifty nears 9,500; 5 factors boosting sentiment

The broader markets also participated in the run with Nifty Midcap index rising 1.3 percent and Smallcap up 1.7 percent.

May 28, 2020 / 05:42 PM IST

The market continued its rally for second consecutive session on May 28 with the Sensex closing above 32,000 mark and the Nifty climbing to two-week high.

The benchmark indices had gained more than 3 percent in previous session and today the Nifty50 was up 175.15 points or 1.88 percent at 9,490.10 on expiry day for May derivative contracts, while the BSE Sensex rose 595.37 points or 1.88 percent to 32,200.59.

"The markets ended the monthly expiry of May on a positive note, not giving up any of its gains which is a good indication of what lies ahead. Every dip now becomes an opportunity to buy or go long," Manish Hathiramani, Proprietary Index Trader and Technical Analyst at Deen Dayal Investments told Moneycontrol.

"We should expect levels closer to 9,700 during the course of the June expiry. As long as we can stay above the levels of 9,000, we are in a medium term bull market," he said.

The broader markets also participated in the run with Nifty Midcap index rising 1.7 percent and Smallcap up 1.6 percent.


Here are 5 factors that boosted sentiment:

Hope of Further Opening Up Economy

Reports suggested that the lockdown is likely to be extended by another two weeks to control the spread of coronavirus but the good thing is that there could be more relaxation which raised hope for less impact on economy and earnings going forward.

The lockdown measures are expected to be eased further in green and orange zones, while the entire focus of lockdown could be on major virus affected cities like Mumbai, Pune, Delhi, Chennai, Ahmedabad, Kolkata etc.

Positive Global Mood Despite US-China Trade Tensions

Dow Jones Industrial Average gained more than 2 percent overnight amid hope of further relaxation in lockdown measures in the United States, which could support sectors which badly hit by the temporary shutdowns.

Among Asian peers, Japan's Nikkei gained 2.3 percent and Australia's ASX 200 rose 1.3 percent despite US-China trade tensions. However, Hong Kong fell 0.72 percent due to rising tensions between world's largest economies US and China.

European markets traded higher by 0.5-1 percent despite US-China tensions mount, as regions are gradually opening for daily transactions.

Hope of Stimulus

After taking care of supply side measures in the nearly Rs 21 lakh crore financial package, reports indicated that once the lockdown eases to major extent, the government is open for another package which could be more focussed on demand revival that hit for more than couple of months.

Reports further said that this package could be given on case to case basis i.e. looking at the lockdown impact on particular sector.

Rally in Banking & Financials

Banking & financials traded strong for second consecutive session amid hope that there could be less NPA pressure. Value buying and short covering could also be other reasons for upside in these stocks.

Nifty Bank index had gained more than 7 percent in previous session, while today it rose around 2.5 percent to climb above 19,000 mark.

The hope of stimulus also lifted sentiment in Auto (up over 3.6 percent), Realty (up 2.5 percent), Metal (up over 2 percent), and Media (up 3.6 percent).

The upside in metals was also because of opening Chinese economy which is the biggest consumer and supplier of base metals.

Technical View

The Nifty50 gained 1.88 percent and formed bullish candle for second consecutive session so far.

If the index holds 9,400 levels in coming sessions then there could be further march towards highs seen in April.

"Recently, Nifty was seen struggling during follow through upmoves and present market action signals strength of bulls to sustain the highs. We expect Nifty to surge further highs in coming sessions," Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.

"Short term trend of Nifty positive. Next overhead resistance is placed around 9,580-9,600 levels, which could be reached in the next 1-2 sessions. Near term upside targets to be watched around 9,750. Immediate support is placed at 9,350," he added.
Sunil Shankar Matkar
first published: May 28, 2020 11:55 am
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