The Nifty gained 0.34% or 74.7 points to close at 22,196 after making a lifetime high of 22,215. The BSE Sensex gained 0.48% or 349.2 points to close at 73,057. The index is still 370 points away from its all-time high of 73,427.
Both indices have gained around 4% in the last one month.
“It is likely that the corrective phase is complete, and the markets have regained the bullish momentum,” said Ruchit Jain, lead research analyst at 5paisa. “The short covering by FIIs after the build-up of short positions last week has also supported the up-move.”
Jain said the FPIs’ long-short ratio in index futures has moved up from 32% to 41% in the past week. The ratio is a measure of the number of bullish positions versus bearish. A rising long-short ratio indicates bullish sentiment.
FPIs net sold shares worth ₹1,335 crore on Tuesday, while their domestic counterparts were buyers to the tune of ₹1,491 crore.The Volatility Index or VIX – a fear gauge – inched up 0.3% to 16, suggesting traders are nervous about the up-move in the market. But, few anticipate a sharp decline from these levels.”While mild corrections are likely, there is no major factor for a sharp fall,” said Sandeep Raina, executive vice president-research, Nuvama Professional Clients Group.
Raina said in the run-up to the elections, the market could swing 1-1.5% either side.
The Bank Nifty rose over 1% on Tuesday, with HDFC Bank, Axis Bank and Kotak Bank gaining more than 2%. “Bank Nifty has also witnessed short covering and breakout of resistance levels,” said Jain. “While some sector rotation is anticipated, the trend remains bullish.”
Elsewhere in Asia, Hong Kong advanced 0.57%, Indonesia rose 0.77%, Taiwan ended 0.63% higher and China gained 0.42%. South Korea ended 0.84% lower.
Technical indicators are pointing to further upside if the Nifty manages to stay above 21,600 – its 40-day exponential moving average (EMA). “Since November, the Nifty has not fallen below 21,600 which makes it the positional support and indicates a bullish momentum,” said Jain. “Nifty could be at 22,500 levels in the near term.”
Raina said that closer to the elections, Nifty can go up to 23,000 levels.
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