Even as the Sensex reclaimed the crucial 37,000-mark, and Nifty surged to fresh 2019 high at 11,149.55 points, a day after election commission announced Lok Sabha election dates, stock market experts point out that investor sentiment is positive as uncertainty eases.
After the Sensex reclaimed the crucial 37,000-mark, and Nifty closed at fresh high in 2019, a day after election commission announced Lok Sabha election dates, stock market experts point out that investor sentiment remained positive as uncertainty eases. The Sensex closed 382 points higher at 37,054.10, its highest since September 2018, owing to a rally in bluechip heavyweights, while the Nifty ended 136 points higher at 11,171.05. We take a look at three key factors behind today’s stock market rally.
After the election commission announced Lok Sabha election dates, investment advisor Sandip Sabharwal noted that the markets tend to climb the wall of worry. “That is what is happening now. Most people are too much focussed on the resolution of uncertainty without realizing that if there is no uncertainty then you cannot buy stocks cheap,” he said in a note to Financial Express Online. According to the expert, high quality growth companies are to be bought when there is scepticism. “Broader markets have just started moving up and there is still a long way to go. Markets will do well after elections too however the value paradigm might be less favourable,” he added. Geopolitical concerns in view of recent military conflicts between India and Pakistan will be a key factor in helping the incumbent government to come back to power at the centre, a PTI report said quoting stock market experts.
Noting that various technical factors are at play behind today’s stock market rally technical analyst Milan Vaishnav said that even as the Nifty traded near 11,150 mark, the traders and investors need to tread ahead very cautiously. “It is beyond doubts that the Nifty has attempted to breakout of the multi-month consolidation on the daily charts, but in the same breadth, it remain quite overstretched on the lead oscillators on the shorter time-frame charts. It is also yet to confirm the breadth,” Consulting Technical Analyst, Milan Vaishnav noted. The Nifty continues to remain prone to sharp profit taking bouts from current levels. However, even if Nifty continues to defy short-term technicals, it may test 11,400-11,450-levels as it continues to be poised comfortably on the weekly charts, he added.
In the run-up to the elections, those sectors like energy, IT, pharma, infrastructure and few Banks which are rotating favourably will continue to relatively out-perform the general markets, he added.
The domestic currency’s strong opening also added to the positive investor sentiment. The rupee appreciated 15 paise to 69.99 against the US dollar Monday on weakening greenback, fresh foreign inflows and higher opening of domestic equities. In its previous session Friday, the rupee edged 14 paise lower to close at 70.14. On a weekly basis, however, the domestic currency logged 78 paise gains. The US dollar depreciated against most Asian currencies after Federal Reserve Chairman Jerome Powell said the central bank was in no hurry to change interest rates, forex traders said adding that fresh foreign fund inflows and positive sentiment on Dalal Street also buoyed the local unit, PTI reported.