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Sensex, Nifty jump over 1%, here’s what pulled stock market from bears’ grip; analysts say buy quality stocks

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Indian equity markets got out of bear’s grip on Thursday, a day of weekly and monthly F&O expiry, amid positive global cues. The BSE Sensex ended 701 points or 1.23% higher at 57,521, while NSE Nifty 50 settled 206 points or 1.21% up at 17.245. The broader markets, however, continued to underperform the benchmark. The BSE MidCap index rose 0.8%, while the SmallCap index went up 0.12%. Sectorally, FMCG, power, auto and capital goods added 1-2% each. The up move came on the back of dovish Bank of Japan policy and encouraging earnings from a few large names in India, according to analysts. Investors are advised to increase their allocation to quality stocks as and when the markets are near the lower range of the above band.

What’s driving the rally and what should investors do?



Nishit Master, Portfolio Manager, Axis Securities, told .com, “Indian markets are following global cues and have surged about a percent on back of dovish Bank of Japan policy and encouraging earnings from a few large names in India. We believe that markets over the near term will continue to be volatile and trade in a band of 16500 to 18000 for Nifty, while for the year we continue to be bullish. We would advise investors to increase their allocation to equities as and when the markets are near the lower range of the above band.”



Traders should remain bullish with a stop loss of 16800

“Indian equity markets surging today on the day of April month F&O expiry. First, long exposure in index futures had dipped to 33% and PCR was also in oversold territory, therefore, we are seeing a short-covering rally thanks to a surge in US futures. Technically, the Nifty is trying to form a base in the 17000-16800 zone which is a 50% retracement area of the previous rally however 17400 is a critical resistance; above this, we can expect a decent rally therefore traders should remain bullish with a stop loss of 16800 where stock and sector-specific approach will be continued,” said Santosh Meena, Head of Research, Swastika Investmart.

Buy high quality stocks in banking, IT which are depressed due to FPI selling

According to V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, ‘sell on rallies’ is likely to be the texture of the market. “A clear trend in markets now, in developed markets as well as in India, is the preference for value stocks over high-priced growth stocks. This is partly a reflection of risk aversion among investors in the present context of mounting challenges posed by the expected aggressive tightening by the Fed and the uncertainties arising from the Ukraine war that is getting prolonged,” he said.

“Dollar index at 103 indicates flight to safety and this implies that FPIs will continue to sell in this market. Sell on rallies is likely to be the texture of this market in the near term. Long-term investors who can ignore short-term gyrations in the market can buy high quality stocks in banking and IT which are depressed due to FPI selling,” Vijayakumar added.

Accumulate fundamentally sound stocks on every dip and hold for the long term gains

Mohit Nigam, Head – PMS, Hem Securities said, ” Indian benchmark indices made a gap up opening today and closed over 1% higher. According to us, indices had a strong support at 17,000 and current correction in lot of scripts has created attractive buying opportunities. Healthy correction and euphoria surrounding the biggest IPO has strengthened the investor sentiments thus, pulling the markets up. In this kind of market, investors should accumulate fundamentally sound stocks on every dip and hold for the long term gains.”

Take cautious bets

“Key Indian equity markets opened higher on Thursday despite weakness in Asian stocks ahead of expiry of April series of Future and Option. The gains were mainly led by two factor — Risk appetite improved globally; and Index heavy weighted stocks are gaining such as HUL, Infosys, and Reliance Industries. Investors are advised to take cautious bets amid concerns over global geopolitics, inflation and monetary tightening by central banks,” said Piyush Chajed, Research Associate, Choice Broking.

(The recommendations in this story are by the respective research analysts and brokerage firms. TheSpuzz Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)





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