After seeing a downtrend for three straight days, the Indian equity benchmarks ended higher on May 26 as buying in metal, IT, power, realty and banking stocks supported the market.
At close, the Sensex was up 503.27 points, or 0.94%, to 54,252.53 and the Nifty was up 144.40 points, or 0.90%, to 16,170.20.
Amid mixed global cues, the Indian market opened on a positive note in the morning but soon erased all the early gains and turned negative. A sudden buying in the afternoon trade helped indices to turn positive and ended near the day's high.
"After a heavy sell-off, the market showed signs of exhaustion and could bounce for the short to medium-term. Technically, the broad market is in the oversold territory and fundamentally valuations are just below the three-year average," said Vinod Nair, Head of Research at Geojit Financial Services.
"A key reason for the current correction is selling by FIIs and a reduction in domestic buying. A drop in FIIs selling will be an important reason for the bounce. For this, the actions to be undertaken by the US FED and RBI in June will be an important factor."
"Moreover, we should note that the fiscal measures announced by the Indian government to control inflation is a positive for the domestic market," he added.
Tata Steel, JSW Steel, Apollo Hospitals, SBI and HDFC Bank were among the top Nifty gainers, while losers included ITC, UPL, Divis Labs, Sun Pharma and Reliance Industries.
Among sectors, Nifty Bank, Metal and PSU Bank indices rose 2-3 percent each and Information Technology index added 1 percent. However, FMCG index ended marginally lower.
Stocks and sectors
On BSE, Metal, IT, Realty, Bank indices gained 1-3 percent. However buying was also seen in the auto, power, oil & gas and healthcare names.
The BSE midcap index rose 1.4 percent and smallcap index added 0.78 percent.
A long build-up was seen in Torrent Pharma, Interglobe Aviation and Dr Lal PathLabs, while a short build-up was witnessed in Havells India, Chambal Fertilisers and Divis Laboratories.
More than 150 stocks touched their 52-week low on the BSE, including SAIL India, Praj Industries, NBCC, JSW Steel, HPCL, Exide Industries and Dabur India.
Among individual stocks, a volume spike of more than 300 percent was seen in Indiabulls Housing, Multi Commodity Exchange of India and Torrent Pharma.
Outlook for May 27
Mohit Nigam, Head - PMS, Hem Securities:
Overall we believe that market volatility may remain at elevated levels and investors should maintain a cautious stance. One can use these dips to start making new positions in fundamentally good stocks but in a staggered manner.
We believe FED’s and RBI actions in June will be an important factor that may decide the direction of the market in the short term.
Immediate support and resistance for Nifty are 16,000 and 16,400 respectively. Immediate support and resistance for Bank Nifty are 34,500 and 35,500 respectively.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities:
Markets witnessed healthy short covering towards the closing hours that helped key indices to reverse the 3-day losing streak. With the US FOMC minutes out of the way now, the market is more or less getting prepared for the likely rate hikes, and hence we saw strong buying on the F&O expiry day.
While we may see bouts of selling going ahead due to other negative factors like higher inflation, continuous FII selling, & the Russia-Ukraine conflict, relief rallies will still be seen amidst volatility.
On daily charts, the Nifty has formed a long leg Hammer formation which supports further uptrend from the current levels.
For the trend following traders, 16050-16000 would act as the key support zone. Trading above the same, the index could rally up to 16300-16375. On the flip side, below 16000, uptrends would be vulnerable. Below which, bulls may prefer to exit out from the trading long positions and index could retest the level of 15900-15850.
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.
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