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Analyst Somesh view - closing comments jan 12

2021-01-12 19:08:24

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Nifty ended at record closing high for third consecutive session and formed bullish candle on the daily chart as closing was higher than opening level, indicating the likely consistency in uptrend. Nifty continued the formation of higher highs from the last fourteen trading sessions.

Nifty opened flat at 14473 and turned volatility to hit an intraday low of 14432, but the buying same dip helped the index recover losses and extended rally to hit an intraday record high of 14590 in afternoon. Nifty closed at 14563, up 78 points.

Nifty gained momentum in late morning deals after volatility, and extended gains to hit a record high near 14600 mark despite RBI's caution over elevated NPA level in current year. PSU banks and auto stocks led the rally.

Market rally continued despite RBI’s caution over elevated NPA levels in 2021, supported by PSU Banks and Auto stocks. Majority of the sectors traded in the green in anticipation of good quarterly result while pharma and FMCG experienced some selling. US bond yield has changed its trajectory to a rising trend, which could impact EMs in the future. But FII inflows are strong and the dollar continues to be weak due to oversupply of USD led by the high amount of fiscal stimulus.

Momentum can take the Nifty upto 14750 level, but the rising volatility ahead of Union Budget could act as a spoiler.

Bull party continued on the bourses as Nifty appears to have resumed its uptrend post indecisive formation of last Monday. As momentum is strong, the index shall remain positively biased, as long as Nifty sustains above 14432 level. In that scenario bulls can extend their upward journey into the zone of 14690/ 14718 level in the next trading session.

Contray to this, some pause accompanied with intraday correction can be expected if the index slips below 14432 level.

Traders with high risk appetite can consider buying into intraday dip, if any, into the zone of 14500/14470 level with a stoploss below 14430 and look for a possible target placed around 14718/14750 level.

Nifty PSU Bank Index added 6 percent with Nifty Bank, auto, infra and energy rose 1 percent each. However, Nifty pharma index shed 1 percent and FMCG index was down 0.5 percent. Midcap and Smallcap indices added 0.4 percent and 0.2 percent respectively.