Realty Gains As Nifty Stages Recovery

The GDP numbers provided some relief to the battered bulls as Nifty staged a smart recovery from sub 5800 levels. GDP came at better that expected 8.9% but even that initially failed to have much impact as Nifty dropped almost 50 points lower to 5770. But then recovery was seen across the board and particularly in the stocks that have seen significant erosion in market cap over past 7 days. So, the best performing sector of the day was Realty as short covering and perhaps some value buying at lower levels helped stocks like DLF, Unitech, Orbit, HDIL and IBRealty to gain ground. The financial stocks too were amongst the gainers as buying returned in stocks like SBI and LIC Hsg. Metals remained under pressure on global worries particularly China. Some of the top gainers of the day were Core, Orbit, REC, HCC, IBReal, DCHL, DLF, BGR Energy, Bharti, IOB, Sobha, LIC Hsg, Renuka, HDIL and Can Bank. Stocks that remained under pressure were Pantaloon, GMDC, Escorts, Divis, Ashok Ley, Tata Steel and Voltas.

Nifty saw a significant rebound from 5770 and rallied more than 100 points intraday. But the 5880-90 level provided stiff resistance as Nifty failed to move past this level. But a small consolation for bulls was that Nifty managed to close above 5850. Broadly we believe that 5880-5915 is likely to be significant level to take out. More significantly Nifty now must stay above 5740-50 to stave off the threat of falling into downward spiral yet again. Bharti has provided leadership in past 5-7 days and it seems that Bharti could continue to outperform. Some resistance is likely around 375-380 but the overall set-up suggests that it could target Rs 425-440 in coming weeks. Some banking stocks like Central Bank( above 192), IDBI( above 166), Federal bank ( above 449), Uco bank and PNB( above 1230) are also showing signs of bottoming out.

Nifty has support around 5810-20 and then around 5760-75 while fresh momentum is likely above 5915.