Indian stock markets were off their intraday highs in afternoon trade today but still remained firmly in the green. The Sensex was up 1.2% to 55,308 after rising to 56,242 in early trade. Analysts have warned of intraday volatility as today is also the expiry day of weekly derivatives contract. Apart from positive global cues, Indian equities also got a boost as trends showed the Bharatiya Janata Party (BJP) comfortably leading in Uttar Pradesh state polls. The BJP was also ahead in three more states, while Congress was facing a rout in Punjab.
But analysts say that the impact of results of state polls on Indian markets is likely to be short-lived with news flow on Ukraine crisis likely to dominate the sentiment.
Asian equities rallied today following a strong bounce on Wall Street and a breathtaking surge in Europe sparked by a plunge in oil prices and bargain-buying following a Ukraine-fuelled rout. The foreign ministers of Russia and Ukraine are set to meet in Turkey, the most senior officials to hold in-person talks since the war began.
“The outcome of election results could have some impact on the market only for 1-2 days. The UP election is considered important from the market perspective," said Parth Nyati, founder of Tradingo.
Santosh Meena, Head of Research, Swastika Investmart, said Indian market today witnessed a strong recovery after a brutal fall thanks to some positive news flows on the Russia-Ukraine standoff and a cool-off in commodity prices.
“The trend of state election results is also acting as a tailwind for the Indian equity market. However, it has the impact of only one day and the main focus of the market will remain on the Russia-Ukraine issue because there are still uncertainties. US inflation numbers will be announced today which is likely to come at a five-decade high and it will act as a critical factor in the upcoming US Fed meeting. Markets are likely to remain volatile till the Fed meeting," he added.
Key Nifty levels to watch now
Technically, he, said, Nifty witnessed a smart pullback from the 15700 level but 16800-17000 is a critical supply area that Nifty has to take out for any trend reversal. “Otherwise there is a risk of sell-off after this pullback. On the downside, 16500-16400 is an immediate support zone while 16000/15500 is the next critical support level. If Nifty manages to take out the 17000 level then the bulls will be back in the game where 17300/17500 are the next resistance levels," Mr Meena said.
Short-term traders, he said, should watch market behavior in the 16800-17000 zone then trade accordingly while long-term investors should continue to accumulate good quality stocks.
“Our top preferred sectors are capital goods, infrastructure, real estate, and financials. But rising commodity prices are a major challenge in the near term. IT stocks may continue to do well after a recent correction while some private banks like HDFC Bank, Kotak Bank, and ICICI Bank are looking attractive after a recent fall," he added.
