Taking Stock | Extended buying pushes Nifty towards 17,500; Sensex gains 550 points

The Indian benchmark indices gained one percent and continued the winning streak on the third consecutive session on October 18 amid positive global cues and the Reserve Bank of India's (RBI) statement about ease of inflation going ahead.

At close, the Sensex was up 549.62 points or 0.94 percent at 58,960.60, and the Nifty was up 175.20 points or 1.01 percent at 17,487.

Intraday, the Sensex and the Nifty touched 59,143.66 and 17,527.80, respectively.

"Benchmark indices gained a percentage today primarily led by the PSU banks as the pick-up in the corporate loan cycle and retail loans during the festive season provided the much- needed tailwinds," said S Ranganathan, Head of Research at LKP Securities.

"The trickle-down effect to the non-banking PSU stocks was a key highlight of today's trade as several PSU stocks led by the defence sector were heavily sought-after on the back of rising volumes," he added.

Retail inflation is set to ease from September levels, while economic activity is poised to expand, the RBI said in its monthly bulletin published on October 17.

"Headline inflation is set to ease from its September high, albeit stubbornly," the RBI wrote in an article titled "State of the Economy", adding the fight against inflation will be "dogged and prolonged", given the long and variable lags with which monetary policy operates.

Also Read: Sensex, Nifty rally for third straight session: Factors propelling the markets higher

SBI, Adani Ports, Eicher Motors, Nestle India and SBI Life Insurance were among the top Nifty gainers. NTPC, HDFC, Bajaj Auto, Tech Mahindra and Britannia Industries were the top losers.

Among sectors, Nifty Bank, Auto, Energy, FMCG, PSU Bank, Information Technology and Metal were up 1-4 percent.

The BSE midcap index gained 1 percent and the smallcap index was up 0.7 percent.

On the BSE, Auto Capital Goods, FMCG, Power, and realty indices rose 1-2 percent, while Bank, Metal, Oil & Gas and Information Technology indices were up 0.5 percent each.

A long build-up was seen in BHEL, Polycab India and Canara Bank while a short build-up was witnessed in Samvardhana Motherson International, Navin Fluorine International and Ambuja Cements.

More than 100 stocks touched their 52-week high on the BSE, including Coal India, City Union Bank, Deepak Fertilisers, Federal Bank, IDFC, Indian Bank, Karur Vysya Bank, PC Jeweller and Ujjivan Financial Services.

Among individual stocks, a volume spike of more than 600 percent was seen in Adani Ports, Polycab India and Samvardhana Motherson International.

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With a gap up opening on October 18, the Nifty surpassed a couple of swing highs on the daily chart. Post the positive start, the index attempted to scale beyond 17,500 but couldn’t break through on a closing basis. In terms of the Fibonacci retracement, a 61.8 percent retracement of the entire September decline i.e. 17,580 is expected to keep the current bounce in check.

The zone of 17,500-17,600 encompasses multiple technical parameters, which are expected to attract a fresh round of selling.

Unless this zone is crossed on a closing basis, the Nifty can start sliding down again. Failure to sustain at this level will push the index back to 17300-17200 in the coming sessions.

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