Dalal Street Corner: Metal Index, Wide Market Helps Bulls Control

Receiving hints from its Asian peers and overwhelmed by the move in heavyweights and larger markets, benchmarks rose more than 2.5% on Tuesday, the day India’s largest IPO, LIC, was listed on the exchange. The market was also supported by aggressive rebounds in metal and energy stocks led by Hindalco, Tata Steel, JSW Steel and Coal India.

The headline index Nifty50 and the S&P BSE Sensex rose 2.6% and above 2.5% as all 50 stocks in the Nilphip Nifty index and 30 shares of the Sensex were comfortably green. The Nifty 50 closed above 16,250 and the Sensex added 1300 points to close at 54,300.

There has also been a lot of support from the broader market, where Nifty Midcap and Small Cap have seen huge buying interest as they have risen 2.7% and 3.3% respectively.

Among sectoral indices, the Nifty led the metal rally as the metals index rose more than 6%, followed by the oil and gas index, which rose more than 3.5% to close on Tuesday.

Despite the muted response from India’s largest IPO, Indian markets have shown a high level of resilience to a firm end, so here’s what market experts have to say about today’s rally.

Vinod Nair, Head of Research, Geojit Financial Services.
After a long hiatus, the market has witnessed a strong resilience supported by heavyweights and broader markets. The market was trading in the oversold zone in hopes of easing regulatory crackdowns and reducing coveted cases, and was led by optimism in Asian markets led by Chinese technology stocks.

The IPO of the much-watched LIC has shown a flexible list. However, we believe that LIC is a viable opportunity to invest in the short to medium term; Its deep discount assessment takes into account the prospects of improving future profits due to changes in surplus distribution rules and strong sector growth.

S. Ranganathan, Head of Research, LKP Securities.

A sharp rise from the Metal Index has lifted Reliance along with other sectoral indices in this afternoon’s trade and the bears are panting and covering small positions and looking for reasons to rally. The day the April WPI crossed 15%, the 2.7% rise in the benchmark index and the breadth of the rally came after a relentless fall that surprised many on the road.

Prashant Tapse, Vice President (Research), Mehta Equities Limited

The bulls roared again on Dalal Street as the Nifty ended above 16250. Metal pack star performers were among the indicators of positive Asian and European stock markets against the backdrop of fears of inflation and stagnation as key benchmark indices rose sharply.

The purchase price supported by the short covering came to the rescue of the bull. The biggest positive catalyst was China – the largest consumer of industrial products – relaxing restrictions on the Covid-19. The optimism was so strong that the bulls stopped functioning on LIC’s weak list (its issue price dropped by 8% from Rs 949 to Rs 873). In the next move, the Nifty Bulls could probably zip into the 200-DMA of 17253. For the index, support is seen at 16000 and below the level, the Nifty could quickly move to the 15671-mark.

Gaurab Ratnaparkhi, Head of Technical Research, BNP Paribahan

The Nifty has been trading on one side for the last few sessions. This created a dodgy pattern on the May 16 daily chart, which was a sign of indecision in the minds of market participants. In terms of price patterns, the Nifty formed a triangular pattern on the hourly chart. On May 17, the index reversed from this indecisive stage.

On the way up, the indicator crossed the 16000-mark as well as the moving average of the original hour, which made the bulls stronger. All these observations indicate that the Nifty has turned its short-term trend positive.

Going forward, 16480-16500 will be the primary target area from a short-term perspective. On the flip side, 16100-16000 will now serve as a near term support zone.

Srikanth Chauhan, Head of Equity Research (Retail), Kotak Securities Limited

Markets witnessed a sharp relief rally as the recent recession kept key indicators in an oversold zone. Traders have covered their short positions in several beat-down stocks that have driven today’s key benchmarks.

However, the rally may be short-lived as concerns about uninterrupted FII sales and further rate hikes in controlling inflation could exacerbate the volatility. On the daily chart, the Nifty has created a long bullish candle which is hugely positive in the short term.

For traders following the trend, 16150 will be the trend deciding level, above which the positive momentum can move to 16380-16450. Conversely, a quick intra-day correction is possible if the indicator falls below 16150. At the same bottom, the indicator may re-examine the level of 16080-16050.

Milind Musala, Executive Director, Julius Bare India

In keeping with the global equity market, Indian equity markets appear to be in a perfect storm, showing a very high level of volatility.

We have been cautious in the markets for some time and we expect that uncertainty and volatility will continue in the near term. In fact, over the last few days, all intra-day recovery sales have been shutting down, and various technical levels are breaking down, making the market even more nervous. Markets will continue to be affected by the central bank’s activities, particularly the US Fed, and the growing news flows about inflationary trends.

In the short term, there may be some technical pull-backs in the market, additional frustration that seems to be floating around and considering that we are in a sell-off situation. However, we seem to be in a somewhat long-drawn phase of consolidation for the market with significant uninterrupted volatility.

(Disclaimer: The opinions / suggestions / suggestions published here in this article are by investment experts only. Zee Business advises its readers to consult their investment advisors before making any financial decisions.)

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