Buying interest expected near-term

The market broke the two-day losing streak to close higher in Tuesday's session, lifted by gains in heavyweights like Reliance Industries and HDFC.

The S&P BSE Sensex rose 312 points, or 0.8 per cent, to 39,435, with Reliance, NTPC, Axis Bank, Tata Steel, and PGCIL among the top gainers. The Nifty gained 97 points, or 0.83 per cent, higher at 11,796. The market breadth was in favour of buyers. About 911 stocks advanced and 834 shares declined on the NSE.

All the Nifty sectoral indices ended the session in the green, with Nifty Metal and PSU Bank gaining 1.7 and 1 per cent, respectively.

In the broader market, the S&P BSE Mid-Cap Index added 96 points, or 0.6 per cent, to end at 14,674, while the Small-Cap climbed 45 points, or 0.32 per cent, at 14,108.

Technical View

According to analysts, the market once again witnessed strong buying interest to get support to reclaim 11,800. The Nifty has recouped major portion of its losses in the last two sessions and concluded in green with the gains 0.83 per cent. The banking index was also showing decent strength throughout the day and has closed above the hurdle of 30,824.

"As far as F&O activities are concerned, some short covering took place in the Nifty futures; whereas, fresh longs were formed in banking index. In early morning trade, 11,700 call writer are quite active but they got intimidate as soon as the Nifty convincingly surpassed 11,700. Eventually, we saw good amount of unwinding in 11,700-12,000 calls. On the flip side, massive writing took place in 11,600-11,800 puts. Tuesday's development in Index options segment is indeed a sign of further strength. Hence, traders are advised trading with a positive bias for June series expiry," said Sneha Seth Derivatives Analyst, Angel Broking.

According to technical analysts, Nifty witnessed a smart upside bounce from near the key lower support of 11,625-650 levels (which is near the previous upper gap area) and closed higher.

"We observe a formation of long bull candle from near the support on Tuesday, which signals an emergence of buying interest from near the supports. The broader trend of the market is stuck within a high low range of 11,800-11,625 levels. Further up move from here is expected to find key overhead resistance around 11,800-850 levels in the next 1-2 sessions," said Nagaraj Shetti, Senior Technical & Derivative Analyst, HDFC Securities.

Market View

Experts feel the market is building up hopes from the Union budget for revival of economy (which has hit 5-year low GDP growth). Further, torrent of tweets from Trump on China, have been keeping markets guessing about his foreign policy and trade war stance in the upcoming G20 meet. Further, his tweets on Iran are crucial for oil.

"Market recovered after two days of consolidation as investors are looking for opportunities in quality heavyweights in segments like banks, cement & infrastructure, where long-term sentiment is positive. A positive momentum was triggered as monsoon intensified and PSU banks outperformed based on the statement from FM regarding faster recovery in bad loans & recapitalization," Vinod Nair, Head of Research, Geojit Financial Services Ltd.