After The Bell: Profit-taking at higher levels; here’s what investors should do on Tuesday

Indian market reclaimed crucial resistance levels on October 5 but failed to hold on to gains towards the close of the session as the Supreme Court deferred the decision on repayment of loans and waiver of interest on loans up to Rs 2 crore.

The S&P BSE Sensex gave up gains towards the end of the session but still managed to close 276 points higher at 38,973 while the Nifty50 was up 86 points at 11,503.

Sectorally, action was seen in IT, metals, healthcare and Bankex while mild profit-taking was seen in telecom, utilities, consumer durables and energy space.

"Indian indices had a very positive start, taking cues from the global market and in anticipation of the Supreme Court verdict of the compounding of loans during the moratorium period,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“Gains came off when the decision was deferred to next week. This delay is unlikely to change the framework for small borrowers and the banking sector as the government and the RBI are expected to maintain the buoyancy of the matter,” he said.

Nair added that in the near-term, the market is expected to maintain its optimism based on US President Donald Trump’s recovery, hopes of stimulus in US and India, upcoming Q2FY21 results in India and the Supreme Court's decision on  interest waiver."

We have collated view of various experts on what investors should do on October 6, Tuesday:

Ajit Mishra, VP-Research, Religare Broking

Markets are closely following global events and the upcoming earnings season would further add to the volatility. We suggest maintaining a positive yet cautious approach and giving preference to index majors. The Nifty has the next hurdle at 11,600.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas

The Nifty opened with a gap-up on October 5 and stretched higher in the first half. The index moved up to tap at the 78.6 percent retracement of the previous fall from 11794 to 10790, which is at 11,580.

The key Fibonacci level acted as a cap for the day and induced the bears into action. Structurally, the index is showing signs of fatigue after having run-up for the last few sessions.

The hourly momentum indicator has triggered a bearish crossover with a negative divergence, which implies that the near-term momentum has started showing weakness.

On the downside, 11,450-11,430 is the immediate support zone, below which a larger decline can be expected.

Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited

The Nifty formed the indecisive spinning top pattern as it failed to hold at higher zones. It surpassed a falling supply trend line on the daily scale by connecting recent swing highs and gave the highest daily close of the last 10 trading sessions.

The Nifty has to hold above 11,450 to witness a further up move towards 11,600 and 11,700 while on the downside, major support exists at 11,350-11,333 zone.

Sumeet Bagadia, Executive Director at Choice Broking

The Nifty continued its early momentum and made an intraday high at 11587.90. However, in the second half, we saw some profit-booking the but Nifty recovered in the dying hours.

Technically, the Nifty has started to trade above its 21-DMA which shows a further upside movement in the index.

At the present level, downside support comes at 11,450-11,400 while upside resistance is at 11550-11600. If the index breaks and closes above 11,600, then 11,800 can be the targets in the short term.

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.