Taking Stock | Sensex, Nifty gain over 1% despite volatility and profit booking

The US Fed rate decision due on September 21 was on domestic investors' radar on Tuesday (September 20). As anticipated, the volatility gripped the Indian markets which swung more than 550 points between days' highs and lows. However, the overall tone was bullish as markets extended their gains for the second successive day.

At close, the BSE Sensex rose 578.5 points or 0.98 percent to reach 59,720 while the Nifty moved higher by 194 points or 1.1 percent to end at 17,816.

Today’s strong showing can be attributed to the positive global cues as the US markets ended with gains on the first week of the day on Monday. Tracking their strength, all the Asian markets edged higher with Hang Seng rising the most - more than one percent. The buying in Indian equities also gained strength after foreign investors renewed their interest after a strong pull-out last week.

Foreign institutional investors (FIIs) net bought shares worth Rs 312.31 crore on September 19 even when domestic institutional investors (DIIs) net sold shares worth Rs 94.68 crore, as per provisional data available on the NSE.

“Bulls charged on D-Street today with the help of Autos & Financials with strong support coming from the laggard - Pharma Sector today”, said S Ranganathan, Head of Research, LKP Securities. “The surprise element to many of course was the Nifty Infrastructure sector which saw smart gains led by Cement yet again”. Consumer Durable stocks, too, displayed good momentum ahead of the festive season on the back of a bountiful monsoon.

All sectoral indices ended in the green today. Nifty Pharma was the top gainer of the day as it surged more than three percent. It was followed by Banks and Auto which ended with gains of close to 1.7 percent. each. Nifty Realty and Metals closely followed with gains of more than 1.5 years.

Apollo Hospitals, Cipla, Sun Pharma, Eicher Motors and IndusInd Bank were the top gainers of the day on the Nifty as they jumped between 3.1 to 5.8 percent each.

Nestle, Shree Cements, Grasim, Power Grid Corporation and Infosys were the top Nifty losers as they shed between 10 to 80 basis points from their previous close.

Stocks & sectors

On the BSE too, all sectors made healthy gains with BSE Healthcare stealing the show with gains of 2.8 percent while BSE Consumer Durables was up 2.2 percent. Auto, Banks & Financials, Industrials, Infrastructure, Telcom and Realty gained more than 1 percent each.

The broader indices displayed all round strength and ended on a strong note with BSE Midcap closing with a gain of 1.65 percent and BSE Smallcap gained one percent.

The India VIX, which indicates the degree of volatility traders expect over the next 30 days, slipped sharply by 5.7 percent from 19.94 to 18.8.

A long build-up was seen in the stocks of Apollo Hospitals, Crompton Greaves and Cipla while a short build-up could be seen in MCX, Lupin and Bharat Forge.

Among specific stocks, Rain Industries and Apollo Hospitals witnessed a volume spike of more than 300 percent while the volumes for MCX were higher by just under 300 percent.

More than 200 stocks created new 52 week highs on the BSE which included Adani Enterprises, Ambuja Cement, Bharti Airtel, Cipla, Escorts, India Cements and TVS Motor.

Outlook for September 21

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

Relief rally continued for the second straight session, which is indicative that investors are finding local stocks attractive after every short-term correction. Even as there are talks of global recession at some point, the Indian economy is holding up really well in times of uncertainty, which is prompting investors to bet on our growth story.

However, Nifty, near the 20-day SMA (Simple Moving Average), has formed Hammer candlestick formation which is broadly negative for the market. We are of the view that the short term support has shifted to 17700 from 17500. If the index slips below 17700, accelerated selling pressure will drag it down to 17600-17500 levels. On the flip side, above 17700, the index could retest the level of 17950-17800.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

The Nifty opened gap up on September 20 & extended the pullback that started on September 19. In terms of the Fibonacci retracement, it went for the deep retracement of the recent decline. It reached closer to 78.6% retracement, where it attracted fresh round of selling. Contracting hourly upper Bollinger Band also acted as a barrier near the key Fibonacci level. Structurally, the Nifty looks poised to form the next leg down. On the downside, the index is set to retest the support zone of 17400-17500 with potential to breach that & tumble towards 17200 subsequently. On the higher side, near term resistance zone is placed at 17920-17950