Analyst Somesh View - Closing Comments on April 26

2021-04-26 17:58:43 By Marepally Krishna

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Nifty formed a bullish candle on the daily chart and has been forming higher highs higher lows since the last two sessions.

 

Nifty opened in the green at 14449 and extended gains to hit the intraday high of 14557. It erased some of the gains but still closed in the green, rising 143 points or 1 percent to 14485.

 

Nifty wiped out some of the gains in afternoon trade but managed to close a percent higher, forming a bullish candle on the daily chart as the closing was higher than opening level.

 

Banking & financials and metals stocks led the rally. Broader markets also traded higher, with the Nifty midcap 100 index rising 0.78 percent and smallcap index 1.1 percent.

 

Positive global cues coupled with good numbers from ICICI Bank ensured a strong opening on Monday for markets led by BFSI and metals. However, we did see bouts of profit-taking in afternoon trade-in FMCG & Pharma stocks ahead of a big earnings day tomorrow.

 

Markets started the week on an optimistic note led by supportive global cues. After a gap-up opening, the benchmark continued its positive momentum led by healthy buying in sectors such as banking (thanks to ICICI results), metals and consumer durables. Broader markets too traded in tandem and ended higher in the range of 0.6-0.9%. 

 

Upbeat global cues combined with supportive earnings are helping the index to hold at higher levels despite COVID challenges. Also, the recent news of various countries extending help to India in the COVID flight further boosting the sentiment. We remain cautiously optimistic as volatility is likely to remain high on the back of derivative expiry and upcoming earnings announcements. Banking, metal and pharma are showing tremendous resilience and should be preferred for long trades on dips.

 

Despite a strong opening, Nifty appears to have registered a weak candlestick formation, by the end of the day, as intraday trading range remained narrower with 136 points. Moreover, it seems to have encountered selling pressure as it entered into the bearish gap area present between 14526/14559 level.

 

In the next session, further upside should not be expected unless the Nifty sustains above 14570. Intraday weakness will be confirmed if the Nifty trades below 14390.

 

For a sustainable upmove, Nifty needs a close above 14570 and in such a scenario, strength shall initially expand towards 14700 level.

 

Traders should remain neutral on the long side, whereas positional shorting opportunity may arise on a close below its 100day moving average, whose value is placed at around 14390, for a modest target of 14200.

 

Except pharma, other sectoral indices ended in the green. Midcap and Smallcap indices rose 0.6-0.9 percent.


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