All eyes on polls and earnings

The market ended in the green on Tuesday after a volatile trading session. The Sensex closed 255 points higher at 38,958, while the Nifty gained 76 points to close at 11,680. Strong buying was seen in IT and real estate stocks.

After opening flat, the Nifty consolidated below 11600 mark. In the latter half, the Index not only recovered completely but also extended the up move beyond 11650 mark on the closing basis.

Amongst the sectoral indices, barring consumer durables and telecom which ended in the red, all the other sectoral indices witnessed buying with auto, banks and reality being the top gainers in the range of 1.1-1.4 per cent.

The BSE Mid-Cap ended higher by 0.2 per cent, while the Small-Cap closed flat.

The market breadth was negative for the day as 1427 stocks have declined against 1155 advanced stocks.

According to analysts, at present, 11550-11600 is an important support area for the Nifty.

Market View
"In the early morning, we witnessed decent writing in 11650-11850 call options but as the day progressed these positions were lightened up. On the flip side, fresh writing was seen in 11500-11650 put options. Considering today's development, we expect further upside towards 11750-11800 going ahead," said Sneha Seth Derivatives Analyst, Angel Broking.

Market gained after a range bound movement in expectation of a turnaround in earnings growth led by Q4FY19 results starting this week while positive global peers aided the market. Banks outperformed as outlook improved led by reduction in stressed assets, repo rate and pick up in credit growth.

"But valuation is on a premium level while start of the first phase of polling may bring volatility in the market," said Vinod Nair, Head of Research, Geojit Financial Services.

The market participants would closely monitor the progress of central elections, behaviour of crude oil prices and fluctuation in currency, as it would further induce volatility in the markets.

In the coming sessions, focus of investors would shift to Q4FY19 earnings season and domestic macro data (IIP, CPI & WPI), which are likely to dictate the trend of the market.

"In the near term, we continue to remain cautious on the Indian markets, as we believe choppiness is likely to remain high. We would advise Investors to stay focused on selective blue chip companies while traders should strictly hedge their risky leveraged positions," said Jayant Manglik, President - Retail Distribution, Religare Broking Ltd.

Technical View
Technical analysts said an alternative candle pattern like negative and positive candles formation over the last four sessions has developed. "If the Nifty fails to sustain above 11700 levels in the next session, then one may expect another negative session. The short term trend of the Nifty is range bound, a sustainable move above 11,700 levels could confirm more upside in the near term, said Nagaraj Shetti - Senior Technical & Derivative Analyst, HDFC Securities.