The benchmark indices rose for the third straight session on Monday buoyed by positive global cues and buying from overseas investors. The BSE Sensex rose 787 points, or 1.3%, to end at 60,747. The Nifty50 settled above the psychological level of 18,000 mark at 18,011 points, up 1.3%. The index has retreated five times in the past year after breaching this mark, with three corrections in excess of 10%.
The BSE MidCap and SmallCap indices rose 1.24% and 0.45%, respectively. Among sectoral indexes, consumer durables, capital goods and auto indices rose the most. The advance-decline ratio was positive at 1.23:1. UltraTech Cement rose 4.1% and was the top Nifty50 gainer. Nine other stocks, including HDFC, M&M, Eicher Motors and Sun Pharma, rose over 2% each.
The markets seem to have shrugged off the possibility of a 75-bps rate hike by the US Federal Reserve later this week. US stocks recovered on Friday from a tech selloff on hopes that the Fed would hint towards dialing down big interest-rate hikes. Oil prices fell by more than $1 on Monday as weaker-than-expected factory data from China and its widening Covid-19 curbs are expected to curtail demand.
“Unlike some export-focused emerging markets, Indian economy is largely dependent on domestic consumption which is driving growth currently. Early festive trends also seem robust. We believe continuation of strong domestic demand, along with relatively robust macro, remains key for India’s continued outperformance,” said Amish Shah, head of India research, BofA Securities.
Foreign portfolio investors (FPIs) net bought equities worth Rs 4,178 crore on Monday, provisional figures showed. In the year to date, investors have net sold shares worth $22.3 billion. “Investors are hoping for a smaller rate hike by the US Federal Reserve this week against the earlier expectation of a more aggressive rate increase. This optimism has fuelled a sharp upsurge, which has pushed both the local benchmark indices above their key psychological levels. Also, FPIs are looking at local shares with renewed interest, which has boosted the investors’ sentiment. However, if the Fed adopts any hawkish stance, markets could be in for a steep correction in near term,” said Shrikant Chouhan, head of equity research (retail), Kotak Securities.
“Technically, the Nifty has formed a bullish candle and higher bottom formation, which are indicating the continuation of an uptrend in the near future. As long as the index trades above 17,900, the uptrend formation is likely to continue, and above the same it could touch 18,100-18,150 levels. Below 17,900, traders may prefer to exit long positions, and on further decline, it could retest the 17,800 mark,” said Chouhan.
“The buoyancy in the global markets, especially the US, combined with favourable domestic cues, is helping the markets to maintain the prevailing recovery. And, we expect the Nifty to regain momentum above the 18,100 level. In line with the trend, participants should look for buying opportunities on every dip and avoid contrarian trades,” said Ajit Mishra, VP – research, Religare Broking.