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Home » Business » Sensex stages recovery, closes 112 points higher after bouncing back from a 900-point drop

Sensex stages recovery, closes 112 points higher after bouncing back from a 900-point drop

Only Sun Pharma, Asian Paints and Kotak Mahindra Bank were trading in the green among the Sensex shares.

By Newsd
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Monday Market Blues

Monday Market Blues: Tata Motors, JSW Steel, Tata Steel, SBI and NTPC were among the biggest losers on May 13 as the Indian equity market declined 656.52 points to 72,007 points.

Against the US dollar, the rupee opened flat at 83.51.

Only Sun Pharma, Asian Paints and Kotak Mahindra Bank were trading in the green among the Sensex shares.

Geojit Financial Services’ chief investment strategist, V K Vijayakumar, said, “The reasons for the aggressive FPI selling in May are unclear.”.

FPI selling has been attributed to possible electoral setbacks for the NDA/BJP. However, the FPI selling is due to a shift from selling China and buying India to selling India and buying China.

Recently, China has outperformed India (Shanghai Composite up 3.96%, Hang Seng up 10.93%) and India has underperformed (Nifty down 2.06%).

The cheap valuations of Chinese stocks and the relatively high valuations of Indian stocks are likely to trigger a near-term trend.”

The auto industry is performing well. It is in a cyclical uptrend. India’s long-term prospects are much better than China’s.

View from a technical perspective

On the technical indicators, there’s a slim chance of a bounce to 22,400 early this week, but only if Nifty stays above 21,777 and surpasses 22,095.

Geojit Financial Services’ chief market strategist, Anand James, said

“The Nifty break of 22000 brought in jitters, and the rebound swing on Friday didn’t push much above 22095, suggesting that we are on track to achieve our 21500 target.”

A relief rally aiming 22223-22400 is likely to unfold this week as a result of the formation of an inside bar, especially at the Bollinger band extremity.

There was a similar set up in oscillators as well as directional moving indicators in late April, during the vertical recovery from 21777. A direct fall below 21777 or an inability to break 22095 would negate upside expectations.

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