Indian markets set to open in green: Will broader markets rebound or continue to witness profit booking?

What was witnessed during Wednesday’s session could be termed as a ‘Tale of Two Markets’ wherein, the frontline gauges displayed tremendous strength, aided by a strong move in the banking & financial stocks but the broader markets ended the day on a dismal note. As a result, the market breadth was weak. Nifty Midcap 100 and Nifty Smallcap 100 were down by 1.19 per cent and 1.01 per cent, respectively. Moreover, not even one-fourth of the stocks from both these broader indices managed to close in green.   

Among the sectoral indices, Nifty Financial Services and Nifty Bank were up by 2.59 per cent & 2.33 per cent, respectively. Interestingly, the top four contributors to Nifty 50 were HDFC twins, ICICI Bank, and Kotak Mahindra Bank.   

Technically, the index formed a bullish candle with a gap-up opening, which indicates a follow-through move in the market. The index formed back-to-back gap-up opening while the upside gap of the last two trading sessions is still intact. Going forward, the opening gap of August 4 (16,147-16,176) may act as a support for the index. Meanwhile, on the upside, resistance is likely to be seen around the level of 16,300.  

Overall, the key takeaway for Wednesday’s session was that the banking and financial stocks assisted the index to remain buoyant while the wreck in the broader markets kept traders on tenterhook. Going forward, we would recommend the readers to be selective in their long positions and follow proper risk management.