Sensex forms small inside body bullish candle

Mumbai: BSE Sensex re-claimed 57,000 level, after a promising pullback rally, the Sensex was up by 574 points. Among sectors, Nifty Auto index outperformed rallied over 2 per cent. Technical selloff was seen in Metal and Media stocks. Technically, after a yesterday sharp sell off the index bounce back sharply, but it is still trading below 200-day SMA which is broadly negative. On daily charts, the index has formed small inside body bullish candle and on intraday charts, it is consistently taking support near 56,800.

"Direction wise, the medium term trend is still in to the down side. But continuation of pullback rally is not ruled out, if the index succeed to trade above 56,800," says Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

For traders, 56,800 would act as a trend decider level, above which the index could rally up to 57,300-57,500. However, below 56,800 uptrend would be vulnerable, he added. Below the same chances of hitting the level of 56,500-56,350 would turn bright.

S Hariharan, head (sales trading), Emkay Global Financial Services, says: "A series of sharp negative reactions to minor misses in earnings from large caps (Infy & HDFC Bank) point to a precarious state of positioning among investors. Under-weight positioning in energy and materials sectors and over-weight positioning in IT & consumer-facing sectors across both DII & FII investors has served to accentuate under-performance by active strategies.

Last quarter earnings are not expected to reflect the full extent of impact of input cost inflation, which flared up meaningfully in March – however, management commentary on the margin outlook for FY23 is expected to play a key role in determining reactions to other quarterly results coming up in the next couple of weeks." As earlier, the macro backdrop remains quite challenging for foreign flows, while valuations do not yet reflect the extent of potential earnings downgrades for FY23, coming up in the next month.