Closing Bell: Nifty at around 17,950, Sensex gains 303 pts led by metal, power, PSU banks

Taking Stock | Market bounces back as investors cheer lower inflation, strong IT earnings

Adani Enterprises, Tata Steel, IndusInd Bank, Eicher Motors and Infosys were among the top Nifty gainers, losers included Titan Company, Apollo Hospitals, Nestle India, Larsen & Toubro and ITC... Read More

Markets traded volatile for yet another session and ended with gains of over half a percent. After the muted start, the Nifty index gradually inched higher and settled at 17956.60 levels. The recovery in banking, IT, auto and metal majors played a crucial role in the rebound while others witnessed a mixed trend. Meanwhile, the broader indices underperformed and closed on a flat note.

Markets will react to the HDFC Bank’s result in early trade on Monday. The recent recovery in the global markets has failed to impress the participants so far however the mood might change if they manage to sustain the gains. To regain some strength, Nifty should decisively cross the 18,100 mark. Meanwhile, participants should restrict positions and prefer a hedged approach.

The Nifty, in the week gone by, witnessed sharp swings in both the directions & ultimately posted a positive weekly close. It has formed a Doji pattern on the weekly chart.

For the last few weeks, the index is trading above the 20 WMA, which has resulted in a Triangle pattern formation on the daily chart. After a recent base formation near the lower end of the pattern, the Nifty witnessed smart recovery on January 13.

Going ahead, 18,000-18,050 will be the key area beyond which the index will be set for a larger up move. On the downside, 17,800 will continue to provide cushion for the index.

Nifty traded negative in the first half, despite positive US and India inflation data. Buying emerged in the second half taking the Nifty higher to end with gains of 92 points (0.5%) at 17952 levels. Broader markets however closed on a mixed note. Except FMCG and consumer durables, all other sectors ended in green with metals and PSU banks gaining more than 1%.

US CPI data for the month of December fell to 6.5%, which is leading to expectation of less aggressive interest rate hikes by US Fed going ahead. On the domestic front, CPI inflation further eased to 5.72% in Dec, while IIP growth improved to 7.1% in Nov’22.

IT results so far came in better than estimates, thus alleviating concerns with regards to growth slowdown on account of macro headwinds. Though the sector may see some more consolidation given macro uncertainties, we believe valuations have largely corrected and offers value buying at these levels. Banking sector will be in focus next week, reacting to the HDFC Banks numbers on Saturday.

Overall the global sentiments are turning positive due to decelerating inflation pressures, which along with better than expected domestic economic data and stable IT results could give support to the markets and help to move higher.

Market session was once again marked with volatility as indices gyrated sharply intra-day before managing to end in positive territory. Reports of cooling inflation and rise in November growth failed to enthuse investors, as higher valuations remain a major concern. Despite improved domestic economic readings, FPI outflows have continued, which has been a major dampener for local traders.

Technically, on weekly charts the Nifty has formed a long legged Doji candlestick formation. For the next few trading sessions, the 100-day SMA (Simple Moving Average) or 17,900 would act as sacrosanct support levels.

A pullback formation above the same could drive the index to 20-day SMA or 18,075. Further upside may also continue which could lift the index till 18,200. On the other hand, a fresh round of selling is possible only after the dismissal of 17,800 and below the same, the index could slip till 17,650-17,600.

On the weekly chart, the index has formed a doji-like pattern, which signifies indecision. However, the Nifty sustained below the 50 EMA on the daily timeframe, confirming an ongoing bearish trend.

The resistance is visible at 18,300, whereas on the lower end, support is visible at 17,800. Any breakout in either direction would create a directional trend in the market.

The Indian rupee gained all five days of the week and registered the biggest weekly gains after November 11 on the back of foreign fund inflows, better-than-expected economic data and broad-based weakness in the dollar.

Risk assets globally rallied and haven dollar slumps after US inflation readings came lower than expected.

The near-term outlook for USDINR remains bearish as long as it trades below 82.10 while on the downside, one can see 81.10 and 80.70.

Easing inflation and brighter Q3 numbers projected by the second set of IT majors are outweighing the cautiousness of the market. CPI in India and US cooled off, thereby bolstering expectations of a less aggressive policy. Falling treasury yields and dollar index are raising investors’ sentiments.

The Bank Nifty bulls managed to hold the support level of 41,700 on the downside, and the index moved higher throughout the day. The bulls, however, to reclaim full control, will have to surpass the level of 43,000 on a continuing basis.

The undertone remains bullish and traders should continue to buy on dips as long as the index remains above 41,700.

Indian rupee closed 21 paise higher at 81.34 per dollar against previous close of 81.55.

: Benchmark indices ended higher in the volatile session on January 13 with around 17950.

At Close, the Sensex was up 303.15 points or 0.51% at 60,261.18, and the Nifty was up 98.40 points or 0.55% at 17,956.60. About 1944 shares have advanced, 1456 shares declined, and 137 shares are unchanged.

Adani Enterprises, Tata Steel, IndusInd Bank, Eicher Motors and Infosys were among the top gainers on the Nifty, while losers were Titan Company, Apollo Hospitals, Nestle India, Larsen & Toubro and ITC.

All the sectoral indices ended in the green with metal, power and PSU Bank indices up 1 percent each.

The BSE midcap and smallcap indices ended on flat note.

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