Sensex at 20K, likely to rise further: Analysts
The likelihood that the US may delay QE tapering due to poor jobs data will provide support, say analysts.Geojit BNP Paribas Financial Services Ltd.
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MUMBAI: The pull-back rally in the Nifty continued for the fourth straight day, and the index posted its biggest percentage gain in over four years on the back of strengtheningrupee against the US dollar, narrowing trade deficit data and receding fears of US attack on Syria.
The likelihood that the US may delay QE tapering due to poor jobs data will provide support, say analysts.
However, the market has run up too fast and traders should book partial profits and cautiously ride the upside, and once the shorts are covered the market may lose momentum, they say.
Trade deficit data for August narrowed to $10.9 billion versus $12.26 billion, month on month (MoM) thanks to a decline in goldimports.
Gold imports fell to $0.65 billion as against $2.2 billion. Gold imports are one of the major factors to hurt India's widening current account deficit.
Exports for the month increased to $26.14 billion as against $25.83 billion, up 1.2 per cent; while imports stood at $37.05 billion as against $38.10 billion, down 2.7 per cent.
"The upmove continued today due to favourable trade data, which fell almost 11 per cent to $10.9 billion, sharply lower than around $20 billion recorded in June this year," said Rakesh Tarway, AVP Research, Motilal Oswal Securities.
"Also, indications of reduced tension in Syria helped market today. Financials were performers with Bank Nifty moving up by around 2.25 per cent. Bank Nifty has now moved up by about 11.5 per cent over the last five trading sessions. Attractive valuations in banks at about 20 per cent cut in the month of July and August helped Bank Nifty perform," he added.
The rupee continued to strengthen against the US dollar as foreign institutional investors tuned net buyers recently.
The partially convertible rupee ended at 63.84, or 140 paise, or 2.14 per cent, as against its previous close of 65.24 per dollar.
"Over the near term, as far as rupee goes, 63.70/80 is a key level on spot, a breach could expose levels of 63.00/62.50 as well. On the upside, we expect the US dollar to remain capped at around 65.20/50 levels on spot," said Anindya Banerjee, currency analyst, Kotak Securities.
The Nifty closed at 5,896.75, after breaching its resistance level of 5,900 intraday. The index closed above its 200-day moving average, a bullish technical indicator.
The Sensex has rallied over 1,762.44 points, or 9.62 per cent, in the last one week. The massive pull-back rally took the bears, trapped with their shorts, with a surprise.
According to analysts, the market is likely headed higher in the near term as positive data back home in terms of rupee appreciation and narrow trade deficit may provide support.
They are advising traders to book partial profits and cautiously ride the upside. Once the shorts are covered, the market may lose momentum, they fear.
"Our belief is that such moves in a short span really do not give much of a window to people to enter or exit. It is good to see that we are above 5,800 but here-on you will possibly go and hit multiple levels of resistances, etc," said Gaurang Shah, assistant vice-president, GeojitBNP ParibasBSE -3.96 % Financial Services.
"Next week onwards, important announcements such as from the US Fed and of course our own credit policy, are lined up. We are at the higher end of the range. Little bit of profit-booking is definitely advised here but on correction this market is a buy on dips," he added.
"We are in a broadly swinging market and the idea should be to be able to play the swings rather than stand against the market and try to prove yourself right," he added.
According to Banerjee, the Nifty is likely to stay in a range between 5,950 and 5,650, as bulk of short covering demand seems to have dissipated from the system.
The likelihood that the US may delay QE tapering due to poor jobs data will provide support, say analysts.
However, the market has run up too fast and traders should book partial profits and cautiously ride the upside, and once the shorts are covered the market may lose momentum, they say.
Trade deficit data for August narrowed to $10.9 billion versus $12.26 billion, month on month (MoM) thanks to a decline in goldimports.
Gold imports fell to $0.65 billion as against $2.2 billion. Gold imports are one of the major factors to hurt India's widening current account deficit.
Exports for the month increased to $26.14 billion as against $25.83 billion, up 1.2 per cent; while imports stood at $37.05 billion as against $38.10 billion, down 2.7 per cent.
"The upmove continued today due to favourable trade data, which fell almost 11 per cent to $10.9 billion, sharply lower than around $20 billion recorded in June this year," said Rakesh Tarway, AVP Research, Motilal Oswal Securities.
"Also, indications of reduced tension in Syria helped market today. Financials were performers with Bank Nifty moving up by around 2.25 per cent. Bank Nifty has now moved up by about 11.5 per cent over the last five trading sessions. Attractive valuations in banks at about 20 per cent cut in the month of July and August helped Bank Nifty perform," he added.
The rupee continued to strengthen against the US dollar as foreign institutional investors tuned net buyers recently.
The partially convertible rupee ended at 63.84, or 140 paise, or 2.14 per cent, as against its previous close of 65.24 per dollar.
"Over the near term, as far as rupee goes, 63.70/80 is a key level on spot, a breach could expose levels of 63.00/62.50 as well. On the upside, we expect the US dollar to remain capped at around 65.20/50 levels on spot," said Anindya Banerjee, currency analyst, Kotak Securities.
The Nifty closed at 5,896.75, after breaching its resistance level of 5,900 intraday. The index closed above its 200-day moving average, a bullish technical indicator.
The Sensex has rallied over 1,762.44 points, or 9.62 per cent, in the last one week. The massive pull-back rally took the bears, trapped with their shorts, with a surprise.
According to analysts, the market is likely headed higher in the near term as positive data back home in terms of rupee appreciation and narrow trade deficit may provide support.
They are advising traders to book partial profits and cautiously ride the upside. Once the shorts are covered, the market may lose momentum, they fear.
"Our belief is that such moves in a short span really do not give much of a window to people to enter or exit. It is good to see that we are above 5,800 but here-on you will possibly go and hit multiple levels of resistances, etc," said Gaurang Shah, assistant vice-president, GeojitBNP ParibasBSE -3.96 % Financial Services.
"Next week onwards, important announcements such as from the US Fed and of course our own credit policy, are lined up. We are at the higher end of the range. Little bit of profit-booking is definitely advised here but on correction this market is a buy on dips," he added.
"We are in a broadly swinging market and the idea should be to be able to play the swings rather than stand against the market and try to prove yourself right," he added.
According to Banerjee, the Nifty is likely to stay in a range between 5,950 and 5,650, as bulk of short covering demand seems to have dissipated from the system.
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