Nifty, Sensex soar nearly 3%, resistance at 16400; volatility to continue, focus to be on macro data

Bulls made a fantastic Friday comeback on Dalal Street as Indian benchmark indices erased previous day losses and ended nearly 3% higher amid strength in Asian markets and US equity futures. The BSE Sensex ended 1,534.16 points or 2.91% up at 54,326.39, and the NSE Nifty 50 shut shop at 16,266.20, up 456.80 points or 2.89%. All the sectoral indices ended in the green with metal, pharma, capital goods, PSU bank and realty indices up 3-4% each. In the broader markets, the BSE midcap and smallcap indices rose 2% each. With result-season coming to an end, the focus will be more on the macro data point including inflation data, monetary policy tightening and rate hikes by Central banks.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities

“After witnessing sharp decline over the past two weeks, the equity markets ended this week on a positive note. However, following global cues, the India equity markets large volatility. Benchmark indices like Sensex 30 and Nifty 50 saw gains between 2-3%. Overall market breadth was positive with gains witnessed across mid-cap, small-cap and most sectoral key indices. Metal sector rebounded sharply post steep correction in recent weeks. BSE IT index was down in an otherwise positive market this week. FII’s continued with their selling in India. Markets remained wary of global growth-inflation expectations. With result-season coming towards the last leg, the focus will be more on the macro data points. Monetary policy tightening action by Central Banks globally amid high inflation will continue to weigh on market sentiments.”

Palak Kothari, Research Associate, Choice Broking

“The Nifty has formed Open Bullish Marabozu on a daily time frame which indicates upside movement momentum for an upcoming session. Moreover, Nifty has been trading in a range of 15750-16410 levels throughout the week crossing either side can direct further direction. In addition, Nifty has given a closing above 9-Day Moving Average which indicates a bounce back from lower levels can be seen. However, the momentum indicators MACD & Stochastic were trading with a positive crossover & reversed from oversold zone on an hourly chart which suggest a northward journey in the counter. The Nifty may find strong support around 16000 levels, while on the upside 16410 may act as an immediate hurdle. On the other hand, Bank nifty has support at 33200 levels while resistance at 34800 levels.”

Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities

“Market took a complete U-turn from Thursday’s slump as bargain hunting following the recent crash and recovery in other Asian indices bolstered the sentiment back home. China’s central bank cutting the 5-year loan prime rate to 4.45% from 4.6% and easing of Covid-related restrictions also provided a major leg-up to the market. Technically, after a sharp price correction, the Nifty eventually took the support near 15750 and bounced back sharply. On weekly charts, the Nifty has reclaimed 16000 and is comfortably trading above the 10-day SMA. The reversal formation is likely to continue if the index succeeds to trade above 16000 and above the same it could move up to 16400. Further upside may continue, which could lift the index up to 16550. However, below 16000, upside would be vulnerable and the index could hit the level of 15800-15700.”

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