Indian equity benchmarks jumped on Friday tracking strength across global markets, as investors awaited jobs data from the US due later in the day. Gains across sectors pushed the headline indices higher, with financial, IT and oil & gas shares leading gains. The BSE Sensex rose 614 points to touch intraday high of 56,255, while the NSE Nifty 50 climbed 165 points to 16,793. According to experts, recovery in global markets, cool off in the dollar index and US bond yields, the resilience of the Indian economy, and continuous support from DIIs fueled the rally. However, market performance is likely to remain range-bound in the near term, they said.
“Indian markets have opened higher due to positive global cues and carrying forward from the momentum of yesterday. Bottom fishing and sufficient discounting of current negatives seem to have caused this up move. This up move could sustain for some more by rising till 16950-17000 but there could be intermittent corrections on the way,” said Deepak Jasani, Head of Retail Research, HDFC Securities.
What is pulling the markets up?
According to Neeraj Chadawar, Head – Quantitative Equity Research, Axis Securities, there has been some recovery in the equity market in the last few trading sessions on account of positive global cues in which India VIX recovered by 20% in the last one week to 20 odd levels (currently below the long-term average). “In FY23, so far, FIIs pulled out $9 Bn from the Indian equity market while DIIs have added $11 Bn. 80% of the FIIs outflow is from the Financial and Tech sector in the last eight months as per NSDL data. The pace of selling has reduced in the last few trading sessions, creating positive sentiments in the domestic market,” he said.
Positive global cues: Major Indian equity indices mirrored an overnight rally on Wall Street and given the gap-up opening on Friday. At current juncture investors keep eyes on US jobs data for clues on the Fed’s interest rate hike prospects. “On technical front in Nifty-50 we can expect the run-up towards 16900-17000 in near term as momentum oscillator RSI continues its Higher Low and reads above 55 which indicates it may continue its upward trend. Any corrections below 16400 can drag-down to re-test the important support level of 15700,” said Akhilesh Jat, Category Manager – Equity Research.
Recovery in IT stocks, RIL gains: According to Vishal Wagh, Research Head of Bonanza Portfolio, the recovery in the IT sector which is well-supported by Reliance is actually helping the rally to carry forward. “Meanwhile, the expectation of crude production increase is also expected which will keep crude under pressure in the coming few days. Short recovery in the frontline is also expected in the coming few trading sessions. Though levels of 16800 are a polarity zone so crossing it will be difficult in the live market it might be crossed with a gap-up opening only. So, weekend global market sentiment will be very important for further progress,” he said.
Cool off in dollar index, US bond yields: “The Nifty and Sensex witnessed a stellar rally from the 15700/52500 levels respectively thanks to the recovery in global markets, cool off in the dollar index, and US bond yields, the resilience of the Indian economy, and continuous support from the domestic investors however it is still a counter-trend rally where 16800-17000 is an immediate resistance area; above this, we can expect a move towards 17500/17800 levels in Nifty. On the downside, 16400 has become a near term base and till then we can say bulls will have control over the market while below 16400, there will be a risk of further correction,” said Santosh Meena, Head of Research, Swastika Investmart.