Caution advised at higher levels as Sensex, Nifty extend record-breaking streak


Indian stock market benchmarks Sensex and Nifty closed at record highs, boosted by gains in heavyweights Reliance Industries (RIL) and Tata Consultancy Services (TCS). The Nifty 50 index rose 0.28% to 13,392.95, gaining for a sixth straight day, while the benchmark Sensex ended up 0.4% at 45,608.

So far this month, Sensex and Nifty have risen 3%, extending November’s 10% gains as markets cheer progress in coronavirus vaccine developments. The indices have risen more than 3% so far in December, hitting record highs in 13 of the last 20 sessions. Also supporting the gains, India reported its lowest daily increase in coronavirus cases since July 10.

Reliance, India’s biggest company by market value, rose 1.8% to its highest close since mid-November, providing the largest boost to the indexes.

Jio, the conglomerate’s telecom unit that has disrupted the industry, will pioneer 5G in India in the second half of 2021, Chairman Mukesh Ambani said in a speech at the India Mobile Congress, adding that policy steps were needed for the early roll-out of the technology.

Tata Consultancy Services Ltd, also boosted the indexes, climbing 2.2% to a near two-month high. Sun Pharmaceutical Industries Ltd slid 2.3%, dragging the Nifty Pharma Index 1.2% lower. The Nifty Metal Index fell 1.2%.

Here is what analysts said on today’s market performance:

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

“As per Japanese candlestick formation, the Nifty 50 index has formed Doji formation at the top of the current up move. It is an indication of indecisive activity after a rally of 650 points in Nifty 50 index. On Wednesday, the Nifty 50 index should trade in the range of 13460 and 13300. Below 13350 levels, the index could fall to 13250 or 13200 levels. On the higher side, 13460 would act as a strongest hurdle and above that, the chances of hitting 13550 levels would turn bright. Traders need to be extra cautious in the market as small-cap stock are participating heavily in the momentum of the market. Buying is advisable only on major dips at around 13200/13180 levels.”

Nagaraj Shetti, Technical Analyst, HDFC Securities

“The short term trend of Nifty is positive with range-bound action. There is a possibility of further upside in the next 1-2 sessions. As we scale higher, there is a higher chances of volatility emerging in the market at new highs. The expected upside levels to be watched at 13500-13600 for the next few sessions. Immediate support is placed at 13300.”

Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments

“The markets have closed within the resistance passage of 13400-13700. There is always a possibility of turning around from these levels and correcting. The overall trend continues to remain positive, but traders should exercise caution at these levels of the Nifty. Strict stop losses should be maintained for all long trades.”

Ashis Biswas, Head of Technical Research, CapitalVia Global Research Limited.

“As of now, the short-term technical condition of the market shows an upward shift of the prevailing market range and it is likely to range between 13290 and 13480. The market breadth improved further along with other momentum indicators like RSI, MACD, indicating the presence of an uptrend. We expect the market to gain momentum, that could lead to an upside projection till the 13480 levels.”

Ajit Mishra, VP – Research, Religare Broking Ltd

“We feel markets have priced in all the positives (vaccine updates, high FII flows, etc) and now the upcoming domestic macroeconomic data viz. IIP, CPI and WPI would be critical for further directional move. Having said that, we reiterate our view to continue with the trend and avoid contrarian trades.”

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