Positive momentum building up in market

The market recovered sharply on Friday and gained nearly a percent amid volatility. The Sensex rose 280.71 points or 0.76 per cent to 37,384.99, while the Nifty gained 93.10 points or 0.85 per cent to 11,075.90.

According to analysts, after four weeks, Nifty was able to come a tad below its important resistance placed at 11100 along with its 50 SMA at 11114. The index, which is still oscillating between its 100 and 50 weeks SMA, saw some improved breadth as the global trade war concerns started fading away along with positive momentum in global markets.

There were some improved breadth in sectors such as Auto, Real Estate, Banking, Midcap and Small cap, Media and Metals.

Technical View

“Nifty bounced back with strong market breadth as there was wide participation from the mid- and small-caps. The undertone continues to remain on the positive side. Index is in a recovery mode and there are more legs on the upside. Nifty is likely to test the 11,300-11,500 zone on the upside. Traders should look to position on the long side. We have been contra  on the index since 10,750 and have been recommending long for 11,300-11,500. We continue to maintain our bullish stance,” Amit Shah, Technical Research Analyst with Indiabulls Ventures Ltd.  

On the local front, news of payment default by an NBFC and mixed macroeconomic data were weighing on the sentiment while possibility of an interim deal between the US and China amid trade tussle and the announcement of quantitative easing program by the European Central Bank eased some pressure. Besides, strong possibility of rate cut by the RBI in the next review meet triggered sharp recovery in the rate-sensitive pack.

“We suggest buying is impending since many indicators have shown divergence and this can be played out in the coming week,” said Mustafa Nadeem, CEO, Epic Research.

Market View

“Subdued inflation kept  hopes alive for rate cut and positive vibes to support the auto sector lifted the markets. Broad based recovery in rate sensitive stocks fuelled domestic market while additional policy measures from the European Central Bank powered global peers,” said Vinod Nair, Head of Research, Geojit Finan-cial Services Ltd.