Index is indecisive among bulls and bears
The fresh uptrend rally is possible only after dismissal of 62,850, above which, it could move up to 63,100-63,300; On the flip side, 62,500 could be the immediate support level for the index
image for illustrative purpose
Mumbai: On Wednesday, the benchmark index BSE Sensex was up by 144 points. Among sectors, Reality, Metal and Media indices rallied over one percent, while selective FMCG stocks witnessed intraday profit booking at higher levels.
Technically, after a promising pullback the index has formed small bearish candle formation which is indicating indecisiveness between the bulls and bears. However, the short-term texture of the market is still in to the bullish side. "We are of the view the view that, the index has completed one leg of pullback rally. For the bulls now, 6,850 would act as a crucial resistance zone," says Shrikant Chouhan, head (equity research-retail), Kotak Securities. The fresh uptrend rally is possible only after dismissal of 62,850. Above which, it could move up to 63,100-63,300, he said. On the flip side, 62,500 could be the immediate support level for the index. Below the same the quick intraday correction is likely. Below which, the index could slip till 62,200-62,000 points. S Hariharan, head (sales trading), Emkay Global Financial Services, said: "Ahead of the last FOMC meeting for CY22, markets have been positioned optimistic about the trajectory of inflation having turned decisively downward. Foreign flows have been supportive for the last 3
months and macro variables continue to support an extension of this trend into CY23 (India's substantial growth differential to the rest of the world, cooling commodity prices, weakening dollar)." Banking sector has the most scope for upside earnings surprises in the ongoing quarter because of the lead-lag between repricing of assets Vs liabilities, and benign credit costs.
Channel checks in smaller cities suggest meaningful down-trading in consumer goods. Hence, one can expect volume growth for consumer staples to be weak despite a reasonably strong festive season. Travel & hospitality sector is expected to lead earnings growth, and cement sector is expected to show a bounce-back in profitability after a weak monsoon quarter. Foreign institutions are most under-weight on IT sector and recent commentary from HCL Tech and LTI-Mindtree is cautious with regard to the demand environment, he added.
