By Rahul Shah
A sharp recovery in the rupee and unabated foreign capital inflows further bolstered sentiment. Sensex zoomed 845 points or 1.40% to settle at 61,795, surpassing its previous closing peak of 61,765 hit on October 18, 2021. Likewise, the broader Nifty rallied 233 points or 1.3% cent to finish at 18,350. There was rally in PSU Bank, IT and Metal stocks. Banking stocks witnessing major gainers this week led by HDFC twins and PSU Bank. Nifty PSU Bank index soared by 6% after announced strong Q2 results. PSU Bank index surged by 28% just one month. Nifty Metal index gained by 2% on expectation of improve demand after China announced to partially remove covid lock down and US Dollar index fell to 3-month low.
Nifty IT Index advanced 2% due to attractive valuation and global cooling US inflation data and China easing lockdown may hit a new horizon in domestic bourses and rally to continue in global markets…Now turn of India Iinflation data to be announced this week. This week, investors will be watching a spate of economic data, including US retail sales numbers on Wednesday, for more clues on whether the Fed’s monetary policy tightening is cooling the economy. On the domestic front, Indian retail inflation data (CPI) will be announced on Monday which will be important for the market while most of the quarterly results have almost announced.
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Expect rally to continue in the domestic equity on optimism that cooler-than-expected US inflation will lead to smaller rate hike by the US Federal Reserve and on China’s move to loosen its Covid Zero policies. On the domestic front, USDINR fell sharply to close 2-month low below 81 indicated aggressive FIIs buying interest (FIIIs net buyers nearly Rs7k last week). Moreover, strong macro data – October PMI reported 6-month high to above 55, 4-month high September IIP data, stable oil price, impressive quarterly results and strong GST collection, will be positive for the market sentiment. Expect beaten-down metal (China to relax zero covid policy stance) and IT stocks (global IT major index Nasdaq gained 7% last week) will be big positive for this week
The domestic market joined the global run as markets across the world cheered the lower-than-expected US inflation data and previous weeks are one of the best weeks in the stock market history. Indian bourses ended on record supported by strong domestic macro data and blessing by US inflation data which has fallen to significantly lower than estimated level along with core inflation number. Global market witnessed biggest gains (between 3-8% and S&P 500 close to 4000-mark psychological level) in over two years after the US Inflation for October has come in at 7.7% (expectation at 7.9%) against previous month was at 8.2%. Core Inflation fell to 6.3% while expectation was 6.5%.
US Dow Jones climbed up over 1300 points or 3.5% and Nasdaq Composite skyrocketed by 7% against the previous week close. A slowdown in US inflation could mean the Federal Reserve won’t have to be so aggressive about raising interest rates. Markets expect the US Fed to raise rates again next month but by a smaller margin of one-half percentage point after a series of 0.75 percentage-point increases. US 10-Year (3.80% from 4.2%) and 2-year bond yield declined by 10% on a single day while Dollar Index fell to a 4-month low to below 106.
Also Read: Rupee likely to appreciate amid weak US dollar, foreign funds inflow; USDINR to trade in this range
Nifty index has formed a Bullish candle on the daily and weekly frame, and has been forming higher lows from the last six weeks. Now, it has to hold above 18300 zones, for an up move towards 18500 then 18600 zones whereas supports are placed at 18188 and 18088.
CMP: Rs 356| SL: Rs 350| Target: Rs 375
ITC has given a consolidation breakout on the daily scale and it has formed a bullish candle which indicates buying interest in the counter. On the weekly scale, the stock is making higher highs since last 2 weeks and overall all setup is very strong for higher levels. RSI oscillator is also positively placed on daily and weekly charts which will support the up move. Considering the current chart structure, we advise traders to buy the stock for an up move towards 375 with stop loss of 350
CMP: Rs 315| SL: Rs 308| Target: Rs 340
Indian Hotels has formed a base near current levels and mutilple times it has taken a support. It has retested the same and formed a bullish candle which indicates positive price setup. RSI oscillator is also positively placed after sell-off post results last week. Considering the current chart structure, we advise traders to buy the stock for an up move towards 340 with stop loss of 308.
(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. The views expressed are the author’s own. Please consult your financial advisor before investing)