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Stock Market Daily Updates: 26 Oct 2020

Nifty future downside support comes at 11860 -11808 level while upside resistance is at 11909-11933 level.

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Dear Trader…

Indian stock markets continued to trade in positive terrain in week session. Besides, broader indices were also trading in green, supporting their larger peers. Sentiments remained positive as Niti Aayog Vice Chairman Rajiv Kumar expressed confidence that money and resources will be in place for a viable and effective vaccination system to fight COVID-19, even as he said it is quite premature to talk about the cost for getting the vaccination. Meanwhile, the Reserve Bank of India in its latest data has showed that bank credit grew by 5.66 per cent to Rs 103.44 lakh crore, while deposits increased by 10.55 per cent to Rs 143.02 lakh crore in the fortnight ended October 9. In the fortnight ended October 11, 2019, bank credit had stood at Rs 97.89 lakh crore and deposits at Rs 129.38 lakh crore.

The world is still reeling under the COVID-19 pandemic, with a second wave making an appearance. The impact of the initial economic stimulus announcements is waning and all eyes now are on what’s next to aid the economy. Progress on this front is slow. US lawmakers are discussing a fresh stimulus though many doubt they will agree on new measures before the presidential elections scheduled on November 3.

Even so, most agree that a fresh round of stimulus will be announced at some time. Incoming data meanwhile indicates continuing economic recovery. The number of Americans applying for unemployment benefits dropped significantly.

In India the government is reportedly working on new measures to revive the economy. Union finance minister Nirmala Sitharaman has said the government is open to another round of fiscal stimulus.

Ongoing corporate results indicate mixed demand trends in the domestic economy. Companies are benefiting from cost rationalization measures but demand is largely driven by rural and semi-urban centers. Sustained government support can strengthen the pace of the recovery.

With the monsoon being very successful across the country, the agriculture sector is expected to see high extraordinary growth this year. This is likely to boost the rural economy and boost economic growth. There are still 16 trading sessions left before Diwali which will be supported by global markets if there is no contingency and the current trend is that the Nifty Future is approaching its pre-2020 high of 12400 above the estimated 12008 points before Diwali.

On the global front, sentiment improved after the countdown to the US presidential election began and the expectation of a stimulus package before the election, along with the global markets,

The Indian stock market will see the impact of the September quarter results locally in the coming days and factors such as the Corona and US elections globally. The Nifty future continued its early momentum and made an intraday high However; we saw some profit-booking come in stock specific. Technically, the Nifty future has started to trade above its 21-DMA which shows a further upside movement in the index.

At the present level, in Nifty future downside support comes at 11860 -11808 level while upside resistance is at 11909-11933 level. If the index breaks and closes below 11808 point, then 11707 can be the targets in the short term.

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Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Nikhil Bhatt | Research Analyst - SEBI

The author is a well established entrepreneur having a more than 16 years of experience in the field of stock market and financial management.

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