MUMBAI: Indian equity markets extended their recovery on Tuesday but opened on a largely flat note, with the Sensex gaining over 140 points and the Nifty holding above the 22,500 level.
Both the indices opened with a gap-up. Sensex opened at 61,935.45 and was trading at around 61,936.78, up 148.26 points or 0.24% against the previous close of 61,788.52 at the time of reporting. Likewise, Nifty opened at 22,603.25 against the previous close of 22,555.75 and was trading at around 22,591.60, up 35.85 points or 0.16 per cent.
Broader market indices mostly traded in the green. Sectoral performance, however, remained mixed in early trade, with Nifty Auto, FMCG, IT, Pharma, Realty, Healthcare and Consumer Durables trading lower. Nifty Private Bank emerged as the top sectoral gainer, followed by Nifty MidSmall IT & Telecom. Ahead of the RBI MPC decision on Wednesday, banking stocks witnessed a rally in early trade.
On NSE, Trent, Kotak Bank, BSE, Axis Bank, Hindalco, Reliance, HCL Tech, Hindustan Unilever, SBI Life, Indi Go, JSW Steel among others were the major gainers. Apollo Hospital, Max Health, Cipla, Maruti, BEL, TMPV, Bajaj Finserv, ITC among others were the top drags. Likewise, on BSE, Kotak Bank, IndusInd Bank, Axis Bank, PNB, Union Bank, among others were the top gainers. Meanwhile, Yes Bank, ICICI Bank, SBIN, HDFC Bank among others were the top laggards.
As per V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, “It would be challenging for the bulls to sustain the rally beyond a point. Since the US 10-year bond yield hovers around 5.3%, FIIs will continue selling, pushing the market construct into a ‘sell on rally’’ mode. This means FIIs will continue to sell large-caps despite their attractive valuations and DIIs will continue to buy these stocks since the fund inflows continue unabated, he noted.
According to Vijayakumar, sustained rally in the market will require sharp dip in crude prices. But there is no clarity on this front. “This uncertainty will weigh on the central bank when the RBI Governor announces the MPC policy decision tomorrow. A 25 bp rate hike appears inevitable in the context of rising inflationary expectations and the rising bond yields in most of the developed world. A rate hike is already discounted by the market and, therefore, the focus of the market participants would be on the policy stance and the RBI’s estimates on growth and inflation,” he said.
Vijayakumar further noted, from the investors’ perspective, “it is important to understand that a rate hike would be beneficial for the banks whose margins will improve from rising floating rates. The strong deposit and credit growth in the economy indicate good prospects for the financial sector.”
Market analyst Vipin Dixena noted, “Indian markets are extending their recovery today, supported by softer crude prices, improved global cues and easing expectations of aggressive US rate hikes.”
In the commodity market, Brent crude was trading at around USD 100.51 per barrel while crude oil was trading at around USD 89.67 per barrel at the time of reporting.
As per the analyst, technically, 22,400–22,200 remains the crucial support zone. On the upside, 22,800 is the immediate hurdle, followed by 23,000–23,200. “Nifty remains below its major moving averages and RSI is still in a weak zone, so I would look for sustained buying above 22,800 before becoming more aggressive,” he said. (ANI)
