Nifty breaks key resistance levels

A big short covering rally in blue chip financial sector stocks led to Sensex and Nifty-50 indices rise by 1.7 per cent, after six consecutive sessions of decline.

Sensex gained 645.97 points or 1.72 per cent after a weak start as the Index fell 116.15 points to day’s low of 37415.83 before a gradual upward move and finally closed at 38177.95. The broader Nifty-50 Index gained 186.90 points or 1.68 per cent closing at 11313.30.

The broader market also rallied but under performed the benchmarks Sensex and Nifty-50, BSE Mid-Cap Index gained 1.38 per cent while BSE Small-Cap Index gained 0.66 per cent.

Technical View
Mustafa Nadeem, CEO, Epic Research said, “Nifty rebounded from lower levels as buying on dips was seen in the broader market with Banks, Financials, PSUs and metals leading. This was a classic reversal set up as Nifty retraced back from very strong supports in the zone of 11200 - 11100. These were important resistances during the August expiry. Derivatives data also pointed to short covering at strikes of 11,300 - 11,400 while long build-up is seen at 11200 - 11300. This indicates that we may sustain the 11200 - 11300 in the coming days. On the upside, resistance is now seen at 11480 - 11520.”

Market View
Ajit Mishra, Vice President, Research, Religare Broking, said, “The bulls staged a smart comeback led by short covering and stable global cues. Going forward, we believe the upcoming earnings season would dictate the trend for the Indian markets. We expect that more than the earnings announcement, investors and traders would focus on the outlook provided by the management especially for consumption driven companies.”