Indian shares rose 3% today to post the second biggest one-day gain of the year as investor sentiment improved across the world after China cut a key benchmark lending rate to support its economy. . The NSE Nifty 50 index closed 2.89% higher at 16,266, while the S&P BSE Sensex closed 2.91% higher at 54,326.39 and posted its first weekly gain in six.
Technical analysts say that the Nifty has shown the first signs of bottoming out in the short term, although the intermediate trend remains lower.
Heavyweight Reliance Industries was the top gainer in the Nifty with a gain of 6.6% to enter its best session since September 2020. Metal stocks, which had slipped over 4% in the previous session, closed 4.2% higher.
“Nifty edged up 20 on positive global cues. A higher-than-expected record cut in China’s 5-year PLR for mortgages (for the second time this calendar year) raised hopes of further policy loosening and boosted risk sentiment. This helped Asian and European markets to trade higher, said Deepak Jasani, Head of Retail Research, HDFC Securities.
“Nifty has shown first signs of forming a stable bottom in the short term. A move above 16404 would further cement those hopes. 16624 will be the next resistance.”
Subhash Gangadharan, Senior Technical & Derivatives Analyst, HDFC Securities, said: “The daily time frame of Nifty indicates that the index has formed a double bottom around 15735 levels and has turned bullish on Friday. A move above the recent swing high of 16400 could lead to further gains in the coming week. While we are open for more pullback rallies in the near future, we must remember that the intermediate trend remains down. The bears will gain more control after a break above the recent intermediate low of 15735.”
Rupak Dey, Senior Technical Analyst, LKP Securities, said: “On the daily chart, the index has formed a double bottom. Immediate resistance is visible at 16400; a decisive breakout above 16400 could prompt a rally towards 16600-16700. End at lower level, support is visible at 16000.
Both Nifty and Sensex had fallen over 2.6% in the previous session as investors worried about the impact of higher inflation.
Ajit Mishra, VP – Research, Religare Broking said, “Markets are witnessing a roller-coaster ride and the key is to manage risk overnight. Going forward, on global cues, earnings finale and the Russia-Ukraine war. Updates will be on the radar. We reiterate our advice to focus more on risk management and prioritizing hedged bets.”