Markets To Inch Higher If Support Levels Are Sustained, Say Analysts

As the bourses extended gains to the third consecutive session, analysts said that if the short covering holds at current levels, markets could witness further upmove.

Short covering that started in previous sessions in both Nifty and Bank Nifty is continuing today, according to Rajesh Palviya, SVP-technical and derivatives research at Axis Securities.

"Nifty is holding above the 21,800–21,850 mark, which is the comfort zone for most of the index traders. If it continues to hold above this mark, then we could see a step towards the 21,950 zone, which is the major supply zone," he said.

The bounceback today might be a pull-off from the oversold zone, said Vijay Chopra, managing director and chief executive officer of Enoch Ventures. "But for certain stocks that are overvalued, we should keep booking profits because when the market corrects, stocks correct even more."

On Thursday, the NSE Nifty 50 ended 70.70 points, or 0.32%, higher at 21,910.75, while the S&P BSE Sensex closed 227.55 points, or 0.32%, up at 72,050.38.

The Bank Nifty is looking a notch better than the Nifty index, and it is continuously holding above the 45,800 mark, which is an important level, Palviya said. "If it continues to hold that level, then we could see a breakout above 46,200 and possibly...higher to 46,600."

Thursday's session saw good participation from PSU banks, Palviya said. Even HDFC Bank Ltd. is starting to recover from its oversold zone, he said.

Companies in the renewable space have the potential to be multibagger stocks, according to Chopra. There will be sharp corrections, but long-term investors should stay invested and not panic, he said.

Palviya said that the oil marketing companies are seeing strong buying action. Most of them, like Bharat Petroleum Corp., Indian Oil Corp., and Hindustan Petroleum Corp., managed to give a breakout on their monthly and yearly charts. "That shows that the long-term trend has shifted, and this bullishness is likely to continue further."

The markets are witnessing sectoral rotation, and investors are chasing good valuations, Chopra said.

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