Sensex, Nifty rally over 3%; 27 stocks in BSE 500 rise 10-30%

After a decent correction, bulls came roaring back this truncated week pushing benchmark indices higher by 3 percent, the best weekly gain since May.

The action was not limited to benchmark indices as small and midcap stocks also participated equally in the holiday-shortened week. Indian market remained shut on Friday on account of a public holiday.

The S&P BSE Sensex rose 3.5 percent while the Nifty50 was up 3.3 percent in the week ended October 1. S&P BSE Midcap index and the S&P BSE Smallcap index closed with gains of about 3.3 percent each in the same period.

As many as 27 stocks that rallied 10-30 percent in just four trading sessions. These include KEC International, Delta Corp, L&T Finance Holding, Dish TV, Welspun India, PVR, and Himatsingka Seide Ltd among others.

A large part of the rally was led by global cues amid expectations of another round of stimulus from the US government. Domestic cues such as upbeat September auto sales numbers, robust GST collections as well as Unlock 5 also supported market sentiment.

“Markets posted decent gains last week, thanks to upbeat global markets and favourable local cues. Among the key factors, rising hope of a stimulus package in the US and guidelines on Unlock 5 boosted the sentiment,” Ajit Mishra, VP - Research, Religare Broking Ltd told Moneycontrol.

“Besides, the rising trend of auto sales numbers in September month for the passenger vehicles and tractor segments also cheered investors,” he said.

The action in the coming week is likely to be dominated by September quarter earnings, Supreme Court’s decision on the interest waiver. On the global front, any update on the US President's COVID situation will also be closely monitored.

Mishra is of the view that the next week marks the beginning of earnings season and among the top names, IT major, TCS, is scheduled to announce its number on October 7. Besides, news related to COVID-19 and updates on the US Presidential election will also be closely tracked.

Technical View:

The Nifty50 formed a bullish candle on the daily and weekly charts for the week that ended on October 1. It closed above 5-Days Exponential Moving Average as well as 50-Days EMA.

Experts are of the view that the banking theme which led the rally from the front is likely to dominate the price action in the coming week along with FII activity.

The S&P BSE Bankex closed with gains of over 6 percent followed by the S&P BSE Consumer Durable index which rose 5.7 percent.

The rebound in banking and financials is a welcome relief as other sectors. The breakout above 11,300 in Nifty has again shifted the bias in the favour of bulls.

“Based on the derivative data FIIs are playing a crucial role in the broader direction of the market. In the past, ahead of the US elections most of the time FIIs have proved right in terms of market direction,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities told Moneycontrol.

“On Monday, 11460 and 11450 would be major hurdles for the Nifty 50 index, however, the outcome from the Supreme Court on the interest waiver would decide the broader trend for the market. The index would find supports at 11300 and 11250 levels,” he said.