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Taking Stock | Indices extend gains, Nifty closes above 16,650, Sensex rises 1,041 points as all sectors end in green

Experts see a near term trend reversal as the market seems to be discounting the future rate hikes by the central banks.

May 30, 2022 / 04:59 PM IST
Representative image.

Representative image.

The positive market sentiments from the previous two days extended to the third on May 30 as Indian indices made a blockbuster opening to the week with a gain of close to 2 percent.

At close, the 30-pack BSE Sensex ended with a huge gain of 1,041 points or 1.90 percent at 55,925.74 while the Nifty closed the day with a gain of 308.95 points or 1.89 percent at 16,661.4.

"A near term trend reversal is visible in the domestic market, supported by valuation comfort and positive trend in the global counterparts,” said Vinod Nair, Head of Research at Geojit Financial Services.

“US stocks were boosted on softening inflation worries which will be a crucial factor in deciding the tone of the upcoming Fed policy meeting while the easing of long-running lockdown in China also helped in lifting the sentiments across Asian markets,” Nair added.

The market sentiments gained strength aided by positive global cues as the US markets witnessed a sharp rally last Friday, the release of the US Fed monetary policy meeting minutes which laid emphasis on the prevailing strength in the US economy, relaxation of COVID-related curbs announced by China and early onset of monsoon in the country which raised hopes of a bumper harvest this year which will boost rural demand.

Close

“Benchmark indices were up 2 percent in afternoon trade today led by IT, auto and state-owned banks buoyed by global cues, a pause in the upward trajectory of the Dollar Index and early arrival of monsoon in the state of Kerala,” said S Ranganathan, Head of Research at LKP Securities.

Tracking their Asian peers, Indian indices made a strong start in the morning, with the BSE Sensex opening with a gain of 623 points at 55,507.75. It gained further strength and briefly breached the psychological barrier of 56,000 to make a day’s high of 56,082.65 points (a gain of 1,198 points from the previous close) after which it pared some of the gains to come down to 55,466.3 which was the intra-day low.

The Nifty made its opening at 16,527.9 with a gain of 175.45 points. It just fell short of overshooting the 17,000 barrier as it made an intra-day high of 16,695.5 points before dropping to 16,506.15 to create its intra-day low.

IndexPricesChangeChange%
Sensex53,234.77326.84 +0.62%
Nifty 5015,835.3583.30 +0.53%
Nifty Bank33,940.90401.45 +1.20%
Nifty 50 15,835.35 83.30 (0.53%)
Mon, Jul 04, 2022
Biggest GainerPricesChangeChange%
HUL2,375.2092.85 +4.07%
Biggest LoserPricesChangeChange%
JSW Steel551.50-27.35 -4.72%
Best SectorPricesChangeChange%
Nifty FMCG39755.651029.80 +2.66%
Worst SectorPricesChangeChange%
Nifty Metal4649.95-46.55 -0.99%

“The market is expected to have a positive run in the near term; however, the impact of central bank policies will be a key factor to be monitored,” said Nair.

Stocks and Sectors

Amidst the widespread strength witnessed across the markets today, all sectoral indices made a positive ending with Nifty Realty leading the pack with a substantial gain of 4.06 percent, followed by IT which gained 3.88 percent during the day. The state-owned banks also made gains today with the Nifty PSU bank index edging higher by 3.21 percent.

The broader indices also made good gains today with BSE Midcap gaining 2.28 percent and BSE Smallcap closing higher by 2.23 percent.

The India VIX, which indicates the degree of volatility traders expect over the next 30 days, skid lower by 6.98 percent from 21.48 levels to 19.98.

Titan Company, M&M, Adani Ports, Infosys and L&T were the top gainers on the Nifty, each gaining between 3.78 percent and 4.96 percent.

Kotak Mahindra Bank, JSW Steel, Sun Pharma, Dr Reddy’s and ITC were the top losers, losing between 0.06 percent and 2.2 percent.

Among specific stocks, the long build-up was seen in Jubilant Foods, Dixon Technologies and City Union Bank.

Of the 3,615 stocks traded on the BSE, there were 2,368 stocks that advanced today, 1,091 stocks declined while 156 stocks remained unchanged.

Outlook for May 31

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd

With clarity now arising from last week's US Federal Open Market Committee (FOMC) meeting about another 50 bps rate hike in the next few months, the market seems to be taking in its stride the future rate hikes and is now seen reversing the bearish trend. While fears of global recession and a further rise in oil prices lurk, investors are currently engaged in buying after the recent free fall.

Technically, in the last three days, the Nifty has rallied nearly 800 points and cleared the 16,400 resistance level which is broadly positive.

For traders, 16,500 would be the trend-decider level, above which the positive momentum is likely to continue till 16,750-16,800. Below 16,500, uptrends would be vulnerable. Any further retracement could see the index retest the level of 16,440-16,420.”

Ajit Mishra, VP - Research, Religare Broking Ltd

Markets have regained some strength citing the less hawkish tone of the US Fed in the recently released meeting minutes. On the domestic front, the early onset of monsoon has further lifted sentiments. Going forward, with earnings season largely behind us, upcoming macroeconomic data i.e. GDP numbers and PMI data and auto sales will be in focus for cues. Amid all, we reiterate our positive view and suggest maintaining “buy on dips” till the Nifty holds 16,300.

Disclaimer: The views and investment tips of investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Gaurav Sharma
first published: May 30, 2022 04:59 pm
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