Indian stock markets continued the celebration of the corporate tax rate cut with a rebound after two days of profit booking and cool off in volatility. Meanwhile, market experts advise that investors should seek value for a longer time horizon as the market would continue to perform.
On Thursday, Sensex gained 396 points and closed at 38,989 points while Nifty closed at 11,571 points, up by 131 points. Commenting on the move, Mustafa Nadeem, CEO, Epic Research, said that the sudden rise and follow-up profit booking were seen on two consecutive days and the markets had now rebounded.
“The important aspect here is that Nifty was able to sustain the lower levels of 11,400. Today's rebound was seen with buying coming back in the overall broader market. The leaders in initial jump were seen extending the gains such as Auto, Financials and Metals,” he said.
He added that derivatives data point to 11,400 – 11,300 as immediate support for Nifty while a huge long build was seen in strikes of 11,700 – 11,600.
“Though after such a sharp positive move there may be range-bound action between a broader range of 11,750 – 11,500. Secondly, there will be FOMO(Fear of missing out) that will be seen as now any dip would be used. The tax cuts is a huge move for the overall market and this is going to play out in the coming days as there will be stock rotations and portfolio construction. Investors should seek value during these times for a longer time horizon. We are upbeat on Autos and Financials,’ he said.
Suveer Chainani, CEO- Institutional Clients Group, Emkay Global Financial Services, said the move to reduce tax rate for new manufacturing companies to 15 per cent would attract FDI in manufacturing, “especially when the Asian supply chains are getting re-configured”.