Sensex, Nifty off to a flying start in October; here’s what moved stock markets today

Sensex and Nifty have stepped foot into October with a strong opening, which saw them gain over 1.5% during the day. S&P BSE Sensex ended 629 points or 1.65% higher at 38,697 points while the 50-stock Nifty closed above the 11,400 mark. Analysts had been saying that Nifty needed to cross the 11,350 levels on closing basis for bulls to shine again. With today’s upwards move, Sensex has ended 2.6% higher while the Nifty gained 2.73%. Banking and finance sector players along with auto stocks were seen surging higher during Thursday’s session.

Economic recovery on cards: With the fifth phase of unlocking bound to start soon, the path of economic recovery for the pandemic hit economy now becomes more clear. To add to that factory output data and the GST collections helped stock market gain. The IHS Markit India Manufacturing Purchasing Managers’ Index rose to 56.8 in September, from 52 in August.  “A 10% month on month rise in GST collections coupled with Unlock Guidelines lent strength to the rally with Financials leading the way,” said S Ranganathan, Head of Research at LKP Securities.

Stimulus hopes: Hopes for a stimulus have been growing not just in the United States but domestically as well. “Market sentiment is bolstered by the increasing possibility of additional stimulus package in India and in the USA. This positive sentiment is likely to sustain even in next week due to possible announcement of fiscal package from the government side in India,” Arjun Yash Mahajan- Head Institutional Business at Reliance Securities told Financial Express Online.

Financials gain: Banking and finance sector stocks surged during the day. IndusInd Bank shares gained over 12% followed by Bajaj Finance. Nifty Private Bank index jumped 4% while Nifty Bank gained 3.7%. Nifty Financial Services zoomed over 3%.

Technical take: Nifty opened near the crucial resistance levels of 11,350 managed to stay above those levels for most of the day. “We have successfully closed above the 11350 zone which is a positive sign for the markets. If we can sustain the present levels of the index, we could move higher to 11600 and then 11800 during the course of the October series. The support for this market is now at 11100,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.

What to expect next week: Eyes will be on the earnings of the listed companies, especially tier-1 IT firms, along with that how the US Presidential Debate shapes up will also be crucial, Sanjeev Zarbade, VP PCG Research, Kotak Securities. Many also believe that that shape taken by global indices will be key for next week. Arjun Yash Mahajan of Reliance Securities highlights that Supreme Court’s hearing could shape up to be crucial for the sustainability of the current rally.

What do the charts say: “After a sizable fall last week in the benchmark index, we maintain a bullish outlook on Nifty as long as it does not fall below the 25% retracement support. The immediate support and resistance are now placed at 11180 and 11540 respectively.  Traders should wait for a decline before building long positions,” said Nirali Shah, Senior Research Analyst, Samco Securities.