Markets end higher for 2nd day in row; Bank Nifty settles above 44k mark

Sensex rose by 144.61 points or 0.23% to end at 62,677.91 after touching an intraday high of 62,835.11. While Nifty 50 surged by 52.30 points or 0.28% to close at 18,660.30 after touching an intraday high of 18,696.10.

In terms of sectoral indices, on BSE, the IT index surged over 262 points, while Bankex settled higher by 106 points. The metal index jumped 320 points, while Consumer Durables and Capital Goods soared over 347 points and 324 points. Notably, Bank Nifty crossed the 44,000 mark for the first and touched a lifetime high of 44,151.80 before ending on a higher note.

Stocks like Tech Mahindra, Tata Steel, NTPC, SBI, IndusInd Bank, Power Grid, HCL Tech, Dr. Reddy’s Lab, L&T, and HDFC were among the top bulls. On the contrary, the top bears were Nestle, ICICI Bank, Bharti Airtel, Asian Paint, and HUL.

Talking about the market performance, Vinod Nair, Head of Research at Geojit Financial said, “Better-than-expected inflation readings from major global economies, combined with an increased appetite for IT stocks, aided the domestic market’s bullishness. US CPI inflation easing to 7.1% in November will lower the chances of the Fed being hawkish. Though the Fed is largely expected to raise rates by 50 basis points, their comments on future inflation and rate actions would dominate market movements.”

On Wednesday, India’s wholesale price index (WPI) inflation dipped sharply to 5.85% in November from the previous month’s 8.39%. The slowdown in this economic indicator is better than estimates of 6.5%. Also, the print is the lowest since February last year.

Meanwhile, India’s CPI inflation eased to an 11-month low at 5.88% in November which is the lowest since December last year.

On the US front, the inflation data came in at 7.1% in November — which is a slowdown in inflation print for the fifth consecutive month. Also, the November figure is the lowest since December last year. In October, inflation data was at 7.7%.

On Bank Nifty touching a new high, Nishit Master, Portfolio Manager, Axis Securities PMS said, financials continue to outperform on the back of strong credit growth, where non-food bank credit grew 18.3% in Oct 2022 vs 6.9% a year back, along with improving balance sheets, where most of the provisioning for bad assets is behind us with improving NIMs due to increasing interest rates where assets are getting re-priced faster than liabilities for banks.

Further, S Ranganathan, Head of Research at LKP securities said, investors were keenly accumulating CAPEX-driven stocks including Railway stocks as many of them were buzzing around in hopes of renewed CAPEX from the GOI.

At the interbank forex market, the rupee traded higher and closed at 82.46 against the US dollar compared to the previous day’s closing of 82.8050. This is the best performance since November 11. Investors await for Fed’s policy meeting and were cautious in the dollar which led to a pullback in the greenback against a basket of currencies.

For Thursday’s trading session, Ajit Mishra, VP – of Technical Research, at Religare Broking said, markets will react to the outcome of the US Fed meeting in early trade on Thursday. A decisive move above 18,750 in Nifty would further fuel the recovery, else consolidation will resume. Meanwhile, traders should maintain their focus on identifying stocks from the sectors which are trading upbeat. Apart from the index majors, one can selectively choose from the broader indices too, citing the recent improvement in their participation.

On Nifty 50, Rupak De, Senior Technical Analyst at LKP Securities said, Nifty remained range-bound following a start with an upside gap. On the higher end, however, it failed to move beyond the resistance of 18,700. The trend remains positive as long as it holds above 18,500. On the higher end, the directional up move may come above 18,700 only. Till then, Nifty may remain within the range of 18,500-18,700.

According to Deepak Jasani, Head of Retail Research, HDFC Securities, the outcome of the Fed meeting could decide the near-term trend of the global markets including India. 18696-18729 band could offer resistance to the Nifty on the up moves, while the 18410-18490 band could offer support.

While on Bank Nifty, Kunal Shah, Senior Technical Analyst at LKP Securities said, the index in order to continue the momentum on the upside must sustain above the 44,000 level to continue the rally towards 45,000 on the upside. After the spectacular rally in PSU banks now it’s time for the private banks to fire up and carry the momentum higher.

Also, S Hariharan, Head – Sales Trading, Emkay Global Financial Services said, the Banking sector has the most scope for upside earnings surprises in the ongoing quarter because of the lead-lag between repricing of assets vs liabilities, and benign credit costs.

Hariharan added that channel checks in smaller cities suggest meaningful down-trading in consumer goods and hence, one can expect volume growth for Consumer Staples to be weak despite a reasonably strong festive season. The travel & hospitality sector is expected to lead earnings growth, and the Cement sector is expected to show a bounce-back in profitability after a weak monsoon quarter. Foreign institutions are most under-weight on the IT sector and recent commentary from HCL Tech and LTI-Mindtree have been cautious with regard to the demand environment.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.