Positive momentum seen in market

The market on Tuesday made further gains with the Sensex closing above 39-K mark for the first time on the back of strong buying in auto, banking and IT stocks.

The Sensex closed at 39,056 up 184.78 points or 0.48 per cent, while the Nifty ended 44 points higher at 11,713.

On the sectoral front, Nifty Realty with gains of 2.3 per cent was the top gainer, followed by Nifty PSU Bank (1.2 per cent), Auto (1.1 per cent), and IT (0.9 per cent). Sectors like pharma, media, metals and FMCG ended in the red.

The major Sensex gainers were Tata Motors, Bharti Airtel, TCS, Bajaj Finance, PowerGrid, IndusInd Bank and State Bank of India. Selling was seen in Bajaj Auto, Sun Pharma, Vedanta, Tata Steel, HCL Tech and HDFC Bank.

The advance-decline ratio was in favor of losers. Of the 2,089 stocks traded on the NSE, 826 advanced, 899 declined, and 364 remained unchanged.

According to analysts, ahead of the RBI policy, the Nifty may break into new highs above 11760 and move towards 11800 range, On the lower side, 11630 is immediate support. Below that 11570 is next support.

Hope of a rate cut is mainly driving the rally. "The weekly strong bull candle which settled above its previous week high indicating continuation of positive momentum ahead in the markets. The Oscillators of gauging the Overbought conditions like RSI, Stochastic, and MACD are on higher side shows the overbought in benchmark Indexes. We expect the index to consolidate in the range of 11400-11800 with some stock specific action," Manish Yadav, Head of Research, CapitalAim said.

However, some analysts feel that the market could face some resistance ahead.

Technical View

"We observe back to back three doji patterns in the last three sessions and today's doji is placed slightly lower to yesterday's doji pattern. Technically, this three formation could be considered as a rare bearish 'tri-star' pattern, which indicate a possibility of top reversal pattern soon in the market," said Nagaraj Shetti - Senior Technical & Derivative Analyst, HDFC Securities

"Still we need confirmation of reversal by the way of decline from the highs. Hence, long positions needs to be careful at the swing highs," he further said.

"The gap formed at the start of the week at 11630 will be seen as a crucial near-term support and only if the same is breached, then we can see some profit booking," said Ruchit Jain, Equity Technical Analyst, Angel Broking Ltd.