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Taking Stock | Pullback rally! Sensex rallies 1,000 pts, but will the rally last?

Nifty formed a bullish candle on the daily charts. It resembles a ‘Hanging Man’ kind of pattern.

March 31, 2020 / 07:15 PM IST

Tracking strong global cues, both Sensex and Nifty50, rallied to close above crucial resistance levels on Tuesday in a single trading session. The S&P BSE Sensex rallied more than 1000 points while the Nifty50 closed just a shade below 8600 levels.

Let’s look at the final tally on D-Street on March 31 – the S&P BSE Sensex rose 1,028 points to 29,468 while the Nifty50 closed 316 points higher at 8,597.

Sectorally, action was visible in oil & gas, energy, FMCG, public sector, and IT stocks. The broader markets underperformed as the S&P BSE Midcap index was up 2.4 percent while the S&P BSE Smallcap index closed 2.9 percent higher.

Investors’ wealth rose by nearly Rs 4 lakh cr in a single trading session. The average market capitalisation of the BSE-listed companies rose to Rs 113.50 lakh cr on March 31, compared to Rs 109.63 lakh cr recorded on March 30.

Top Nifty gainers include names like GAIL India, RIL, Britannia Industries, and BPCL.

Top Nifty losers include names like ZEE Entertainment, Cipla, Eicher Motors, Bajaj Finserv, and IndusInd Bank.

Will the rally continue?

Indian markets recovered most of the losses made in the previous session after Chinese factory activity raised hopes of a more stable economic recovery from the coronavirus pandemic.

For the financial year 20’, the S&P BSE Sensex witnessed a fall of 24 percent while the Nifty50 plunged 26 percent in FY20, the biggest fall in fiscal since FY09, CNBC-Tv18 data showed.

In absolute terms, the market posts the biggest decline in fiscal ever in FY20. It comes after recording positive close for the last three consecutive financial years.

The Nifty & Sensex fell by about 23 percent each in March 2020, the biggest monthly fall since Oct 2008. But, the big question is – is there more selling in the offing?

Well, the market is moving in a range and going by technical crucial levels on the upside still remain unconquered which might be a concern for the bulls.

Traders are advised to stay light and as long as Nifty trades above 8555, the upside is likely to continue. A break above swing high of 8660-8676 is likely to instill confidence in the current set up.

"The index concluded the session a tad below 8600 mark and formed a Bullish candle on the daily scale. Index concluded the financial year 2019-20 with a loss of 26% and ended the March month with a loss of 23.25%, which is the biggest monthly loss after Oct 2008," Chandan Taparia of Motilal Oswal Financial Services Ltd told Moneycontrol.

"At the current juncture, weekly set up is still negative but pause in selling pressure is visible as a base of the index is slightly shifting higher. It has been moving in between 8250 to 9000 zones from the last four trading sessions and it requires to hold above 8555 zone to witness an up move towards 8888 and then 9000-9200 zones while support is now placed at 8300-8250 then 8000 levels," he said.

Stocks & Sectors:

Sectorally, the S&P BSE Oil & Gas index rallied 8.7 percent, followed by the S&P BSE Energy index which gained 7.8 percent, and the FMCG index was up 5.7 percent.

Volume spike of 100-400% was seen in Divi’s Laboratories, BPCL, OIL, Vedanta, Pidilite Industries, and Amara Raja Batteries.

Long Buildup was seen in stocks like Godrej Properties, Ramco Cements, Tata Chemicals, JSPL, and Amara Raja Batteries.

The short buildup was seen in stocks like RBL Bank, Cummins India, Chola Finance, and Apollo Tyres.

Stocks in the News

Oil & gas stocks rally: Oil & gas stocks rallied on March 31 after global crude oil prices plunged to their lowest level since 2002, an 18-year low on heightened fears that the global coronavirus shutdown could last months. Share of BPCL and HPCL zoomed 13-15 percent while Reliance Industries, ONGC, GAIL India and IOC jumped 6-8 percent.

IndusInd Bank: Shares of IndusInd Bank was down 14 percent on March 31. Of the total fall in deposits since Q3FY20, 70 percent was through state government deposits and 30 percent was via corporate deposits.

Cyient: Cyient share price rose 5 percent on March 31 after the company received clearance to produce medical equipment that is critical in the fight against COVID-19.

Cadila Healthcare, Ipca Labs: Share price of Cadila Healthcare rallied 6 percent and Ipca Labs 5 percent on March 31 after the US health regulator issued Emergency Use Authorisation (EUA) for hydroxychloroquine (HCQS) and chloroquine for COVID-19, CNBC-TV18 quoted Morgan Stanley as saying.

Metal stocks shine: Share price of metal stocks gained on March 31 after factory activity in China unexpectedly expanded in March after contracting sharply to a record low, official data showed. The top gainers included Steel Authority of India which surged 13 percent followed by Tata Steel, Vedanta, Hindustan Copper, Hindalco Industries, Jindal Steel & Power, JSW Steel and NALCO.

Technical View:

Nifty formed a bullish candle on the daily charts. It resembles a ‘Hanging Man’ kind of pattern

Experts feel that a breakout in the index will be confirmed on a close above 8660 levels signaling the beginning of a fresh leg of an upswing with bigger targets placed around 9500 levels

It is critical for Nifty to sustain above 8244 levels as a breach of this level can resume the downswing with targets placed in the zone of 8100 – 7900 levels.

“For time being positional traders are advised to retain optimistic outlook and should consider fresh long positions on a close above 8660 levels for bigger targets,” Mazhar Mohammad of told Moneycontrol.

Kshitij Anand
Kshitij Anand is the Editor Markets at Moneycontrol.
first published: Mar 31, 2020 04:59 pm