Reliance, ITC push Sensex 1344 points up, Nifty above 16150 could touch 16450 soon;

The BSE Sensex and Nifty rose 50 points for the second day in a row on Tuesday. The BSE Sensex rose 1344.63 points, or 2.5 per cent, to 54,318, while the NSE Nifty 50 settled at 16,259. Index heavyweights such as Reliance Industries Limited (RIL), ICICI Bank, Infosys, ITC, TCS and L&T contributed the most to the gains of the index. The broader market is consistent with equity frontliners. The S&P BSE Midcap Index jumped 2.5 percent or 556 points to 22,701, while the S&P BSE SmallCap Index added 2.78 percent or 712 points to 26,318.

S. Ranganathan, Head of Research, LKP Securities

A violent uptrend in the metal index has lifted Reliance Industries Ltd. along with other sectoral indices in this afternoon’s trade and left the bears breathless 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.

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. Even from FII’s point of view, they appear to be one of the lowest net long positions in the F&O segment in recent times, which could trigger some short covering as markets begin to rise. However, we seem to be in a somewhat long-drawn phase of consolidation for the market with significant uninterrupted volatility.

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.

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.

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