After The Bell: Nifty back above 11,700, here's what investors should do on Thursday

Indian shares rallied for the fifth consecutive day on October 7, pushing benchmark indices towards crucial resistance levels. The S&P BSE Sensex rallied by over 300 points while the Nifty50 reclaimed 11,700 for the first time since February.

The Sensex ended the day 304 points higher at 39,878 while the Nifty50 closed with gains of 76 points at 11,738.

Sectorally, action was seen in consumer durables, energy, and auto indices while profit-taking was visible in metals, realty, and power indices. The broader markets underperformed the benchmarks and both midcap and smallcap indices closed in the red.

Looking at five straight days of gains, there is a high likelihood of some consolidation in the next few sessions, experts said.

"Observation is that main indices have almost reached the last high, in context with a bounce in the global and the domestic economy. Going ahead, the market may turn a bit volatile in the short term, as it will be difficult to maintain the momentum given important upcoming events of the US election and Q2 result season,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“Secondary indices of mid and smallcaps are under some resistance, as investors are risk-averse at these levels. Stock wise positive or negative performance is expected to continue as per the expectation and actual performance of Q2FY21 result," he said.

Here is what experts have to say on what investors should do on October 8:

Ajit Mishra, VP-Research, Religare Broking

Markets will react to TCS numbers and the management commentary in early trade on October 8. A decisive breakout above 11,800 in the Nifty will further fuel the rally else some profit-taking can’t be ruled out.

We feel it’s prudent to book partial profits after the recent rally and wait for any dip to re-enter the index. Stocks, on the other hand, are offering opportunities on both sides, so plan your trades accordingly.

Sahaj Agrawal, Head of Research-Derivatives, Kotak Securities

The Nifty witnessed a significant recovery from sub-11,000 levels and is trading at around 11,750. Momentum and options data suggest a positive setup and continuation of the upmove.

Interim corrections should be used to accumulate, as the broader setup remains positive. On the higher side, expect the Nifty to test 11,950-12,200 in the medium term.

On the downside, strong buying support is expected at 11,300. Metals, auto, and FMCG remain attractive at current levels.

Dr Joseph Thomas, Head of Research, Emkay Wealth Management

The frontline indexes held quite well and advanced during the trading, ignoring some of the overnight negative developments in the US.

The failure to close a deal on the fiscal stimulus and the spread of the pandemic in the US, even in the White House, has been largely ignored by the eastern markets and the focus may be now on the presidential elections and the outcome.

The markets seem to be well supported around the current levels and maybe looking for fresh developments on both sides of the Atlantic later in the day.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas

The Nifty extended gains on October 7. The index is now close to its August high of 11,794. The broader market indices, however, have been lacklustre for the last few sessions.

The midcap and the Smallcap indices are trading well below their respective swing highs. Thus, traders need to be cautious at this level and should have a stock-specific approach for the short to medium term.

We need to see whether the bulls manage to take out the level of 11,794 on a closing basis or not. A failure to do so will push the Nifty down to 11,400 in the short term.

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

The Nifty50 has been making higher lows for the last eight trading sessions and supports are gradually shifting higher. It formed a bullish candle and gave the highest daily close since February 26, 2020.

The index has gained nearly 900 points in the last eight trading sessions and continued its winning streak for the fifth day.

Now, the Nifty has to continue to hold above 11,600 for a further upmove towards 11,900 and 12,000 while on the downside, major support exists at 11,550 then 11,450 zones.