Nifty, Sensex bounce back on Friday but experts see resistance at higher levels

• Nifty50 went over 19,700 and settled at 19,638, gaining as much as 0.5% in day’s trade.
• The Midcap index outperformed the benchmarks and closed in the green for the week.
• FII selling, rising US bond yields, and surging crude oil prices have been pulling down markets in the last few sessions.

Indian benchmark indices bounced back on Friday as the global economic outlook improved. The United Kingdom’s GDP grew by 0.2% in the second quarter of 2023, providing positive cues for the markets.

Nifty50 went over 19,700 and settled at 19,638, gaining as much as 0.5% in day’s trade. Almost all its constituents traded in the green, with the exception of Adani Enterprises, Asian Paints, Power Grid and a few other tech stocks. Sensex was up by 320 points in the day’s trade, to close at 65,828.

“Positive global cues provided major impetus to local markets as Sensex marched past the psychological 66,000-mark intra-day before paring some gains towards the closing stages. Buying in metals, oil and gas, and power stocks fuelled a major rally, but profit-taking in select frontlines saw indices end off their day's highs,” said Amol Athawale, vice president - technical research, Kotak Securities.

All of Nifty’s sectoral indices closed in the green with the exception of tech stocks. Infosys and HCL Tech as the top losers on the Nifty50 index. Hindalco, NTPC, Dr Reddy’s, Hero Motocorp and Tata Motors were the top gainers in the session.

After today’s rally, Nifty ended the month of September with gains, following a weak August closing. On Thursday’s Nifty and Sensex closed 1% lower, and the last few sessions have also seen profit-booking. Most experts are unsure of how long Friday’s rise will sustain.

“We need to close above 19,750 to witness a decent rally over the short term. A close or sustained move above 19,750 might take Nifty on a ride towards 20,500-20,700. On the flip side, a fall below 19,470 might trigger the resumption of the downtrend," said Rupak De, senior technical analyst at LKP Securities.

However, both the benchmarks saw a second straight week of losses. The Midcap index performed better and closed in the green for the week. It is noteworthy that six of the top 10 Nifty losers in the week were IT stocks, namely Tech Mahindra, Infosys, LTIMindtree, Wipro and HCL.

Markets turn dizzy at highs

Vinod Nair, the head of research at Geojit Financial Services said that the market is facing stiff resistance at higher levels due to insipid liquidity and a lack of triggers to overcome the bears.

“The upside risk to domestic inflation may recede with the return of a good monsoon in September. This, in turn, could provide the RBI with leeway to maintain a pause in the upcoming policy meeting next week," said Nair.

The RBI’s Monetary Policy Committee (MPC) meeting will take place between October 4-6, where a decision on policy rates will be taken.

“Markets were subdued to negative over the past few sessions due to worries over likely rate hikes, FII selling, dollar strength, rising US bond yields, and surging crude oil prices, but India still provides some stability in an unpredictable market due to strong economic activity and hence our markets will continue to attract investors' attention over the medium to long-term perspective,” said Athawale.

Firm domestic market trends helped Indian Rupee appreciate by 14 paise to settle at 83.05 against the US dollar on Friday. A sharp correction in the greenback against major rivals overseas, also aided the rise.