Sensex, Nifty extend gains despite oil hovering near $115/barrel. What lies ahead?

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Sensex was up nearly 10 points above 73,620 while Nifty 50 was up 25 points near 22,780, as seen at 10.10 am on Tuesday. Smallcaps sharply rallied, pushing the Nifty Smallcap 250 index up 2%, while the Nifty Midcap 100 index gained over 0.7%.

Bharat Electronics, Bharti Airtel, Maruti Suzuki, Power Grid, NTPC, Tata Steel, Sun Pharma and IndiGo shares were the top gainers on Sensex, rising 1-2%. Meanwhile, HUL, Infosys, TCS, HCL Tech and Tech Mahindra shares fell 1-3% to lead losses on the benchmark index.

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Among the indices, Nifty Pharma and Nifty Realty indices jumped around 2% each, while Nifty Auto and Nifty PSU Bank index were up more than 1% each. Nifty IT, however, dropped nearly 2%. The overall market breadth continued to remain positive, with NSE seeing 2,577 advances against 554 declines, while 98 stocks remained unchanged.

What lies ahead for Dalal Street?

Brent crude remaining near $115 and the US 10-year bond yield hovering around 4.97% continue to be near-term headwinds for the market, said V K Vijayakumar, Chief Investment Strategist at Geojit Investments. He noted that FIIs will remain in a risk-off mode in this adverse macro setting. However, the improving fundamentals of the corporate sector as reflected in Q2 earnings and the robust domestic fund inflows will continue to support the market, he added.

“The imminent US mid-term elections will have its impact on the market. Polls indicate the Republican Party losing the House of Representatives and a tough fight in the elections to the Senate. Big setback to the Republican Party will considerably erode the President’s power. But the mercurial President Trump may react in an unexpected manner in his Iran strategy. There can be unexpected developments in the Middle East, with consequences for crude prices. Investors may closely watch the developments and decide based on the emerging scenario. Value buying opportunities should not be missed,” according to the analyst.

Technical view on Nifty

Nifty both recovery attempts and the easing on approach to 22,690 yesterday were on anticipated lines, said Anand James, Chief Market Strategist, Geojit Investments. He noted that as long as dips are contained above 22,630, he will remain interested in an upside play aiming for 23,000 or even 23,500, with volatility expectations once inside the 22,800-900 region.

Alternatively, Nifty’s inability to float above 22,630 could expose 22,250-22,000, but a collapse is less expected, according to the analyst.