Private bank stocks continued to see buying after the Finance Ministry lifted an embargo on the allotment of government business to them, which pushed benchmark indices higher on Thursday.
Positive global cues also supported the buying. However, analysts expect volatility as the monthly futures and options (F&O) contracts are set to expire later in the day.
“In this volatile market, where dips and bounce backs are sharp, the directional trend is upwards. The ‘higher highs’ & ‘higher lows’ indicate the long-term bullish trend. The fundamental reason for this trend, which is global, is the abundant liquidity available in the global financial system and the Fed’s declared commitment to keep liquidity flowing and maintaining interest rates at historical lows,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“The takeaway from this is that markets can remain buoyant for an extended period of time. While riding this bull run investors will have to remember the fact that valuations are high and there is risk ahead. Financials, particularly banks, appear strong fundamentally.”
Factors driving the market
- Fed stands behind growth: US Federal Reserve Chair Jerome Powell, testifying before the House of Representatives Financial Services Committee, continued adding weight to the US central bank’s promise to get the economy back to full employment, and to not worry about inflation unless prices begin rising in a persistent and troubling way.
- US bond yields rise: Benchmark US Treasury yields hovered near a one-year peak hit in the previous session. The dollar languished near three-year lows versus riskier currencies.
- F&O expiry: Traders are expecting volatile moves as February contracts are set to expire today. Moreover, yesterday’s chaos due to technical glitch at NSE will also be in the mind of traders.
- Commodities on a high: Prices of commodities continue to remain high, reflecting recovery in economic health. This is also keeping metal stocks buoyant as they see a lot of demand from investors.
How are the blue chips doing?
After opening in the green, benchmark indices strengthened their lead. At 10:10 am, BSE flagship Sensex was up 413 points or 0.81 per cent at 51,195. NSE benchmark Nifty followed, adding 147 points or 0.98 per cent to 15,129.
“After the sharp up move on the index yesterday afternoon, it is recommended to wait for a couple of days before taking a position in either direction. Since it is the monthly expiry today, traders should wait it out to see where the Nifty is likely to move. If we manage to close above 15,100 and sustain above it on Monday, it is quite possible the uptrend has resumed again and we should then look forward to higher targets. If we turn from these levels and break 14,900, we can reconsider opportunities to go short. It is definitely a wait and watch situation and hasty decisions should be avoided,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
In the 50-share pack Nifty, Hindalco was the biggest gainer, up 4.31 per cent. UPL, Axis Bank, IndusInd Bank, JSW Steel, Tata Steel, HDFC Life Insurance, DR Reddy’s Labs and BPCL were among other gainers.
Nestle India was the top loser in the pack, down 1.13 per cent. Hero MotoCorp, Britannia, Titan, Asian Paints, Bajaj Finserv, HUL, Tech Mahindra, ICICI Bank and UltraTech Cement were other losers in the pack.
Broader market indices traded with gains trading in-line with their headline peers in morning trade. Nifty Smallcap was up 0.94 per cent while Nifty Midcap added 0.94 per cent. Broadest index on NSE, Nifty 500 was up 1 per cent.
BHEL, HUDCO, Max Financials, BEML, NBCC and Just Dial were among major gainers from the space while IEX, Rain Industries, Indiamart Intermesh, Mphasis, PI Industries and Varun Beverages were under selling pressure.
MSCI’s ex-Japan Asia-Pacific shares index rose 1.0 per cent while Japan’s Nikkei gained 1.6 per cent.
Hong Kong’s Hang Seng jumped 1.8 per cent to pare more than half of its previous day’s losses following the announcement of a stamp duty hike.
On Wall Street, the Dow Jones average jumped 1.35 per cent to a record high, outperforming 1.0 per cent gains in tech-heavy Nasdaq, as investors rotated into cyclical shares out of flying-tech firms.
Credit: Stocks-Markets-Economic Times