Sensex, Nifty march higher for second-day straight, Auto stocks accelerate; focus now on US Fed meet

For the second day straight Sensex and Nifty managed to end the day with gains. Although S&P BSE Sensex opened flat and witnessed a rocky morning, it only gained momentum and finished the day’s trade 258 points higher. The Nifty 50 managed to breach the 11,600 mark on closing basis. Analysts say that equity markets could be in for more bullish moves in the coming trading sessions that could take the markets higher. Volatility slipped below 20 levels to end at 19.60 on Wednesday. Midcap and small cap stocks continued to witness momentum.

Auto stocks zoom: Auto stocks were favoured on Wednesday as the gained momentum. Mahindra & Mahindra’s shares surged over 4% while the BSE Auto index gained 1.5%. Analysts say that demand for vehicles has improved owing to the unlocking of cities and festive demand. Additionally the government’s intention to bring a vehicle scrapping policy is likely to push demand for commercial vehicles in the near future. 

Top Gainers: Mahindra & Mahindra, Bajaj Auto, Sun Pharma, and HDFC Bank were the top gainers on Sensex. On the BSE Midcap index, Ramco Cements, Adani Enterprises, and L&T Finance Holdings were the top performers. Among BSE smallcap constituents, Man Industries and Indostar capital finance gained over 16% each. 

Top drags: IndusInd Bank was the worst performing Sensex stocks, followed by NTPC and SBI. On the BSE Midcap index, SAIL, Sun Tv, and Emami Ltd were the drags. ITD Cementation and Wabco India were the worst performing stocks on the smallcap index. 

Bulls returning: Chartists believe the upmove seen in the equity markets could be a positive sign. “Nifty gave a breakout above 11450 in the recent past and has entered a bullish phase for the short term. On the higher side, a target of 11900 can be expected in the next few weeks,” said Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities.

Midcap, smallcap surge again: Although they failed to outperform the benchmarks, the midcap and smallcap indices continued to march higher. ““Broader markets are seeing classical signs of rotational flow, as Mid-caps & Small-caps have significantly outperformed headline indices and market breadth has turned encouragingly positive. Small-cap index is up 5% so far this week after SEBI’s new regulation pertaining to asset allocation rules for Multi-cap funds while Nifty is up 1.5%,” said S Hariharan, Head – Sales Trading, Emkay Global Financial Services.

Markets look toward US Fed meet: Later today The United States Fed will meet which is likely to guide the markets going forward. “Any indication of increased bond-buying will be a positive trigger for the markets. Markets are expected to be in sync with global cues tomorrow. Upsides seem to be limited, considering the lack of fresh domestic triggers for the market,” said Vinod Nair, Head of Research at Geojit Financial Services.

Technical outlook: “Nifty has witnessed fresh breakouts on intra time frames which suggest current pull back can extend up to 11650-11700 zone which are strong hurdle on higher side, support is shifted to 11550-11500 zone. Nifty bank closed a day at 22574 with gains of half percent, support for nifty bank is coming near 22400-22200 zone and resistance is placed at 22750-23000 zone,” said Rohit Singre, Senior Technical Analyst at LKP Securities.