Closing Bell: Nifty ends above 18,300, Sensex up 234 pts; pharma, IT, metals rally

Taking Stock: Market gains for second day; Sensex up 234 points, Nifty above 18,300 as IT, metals shine

Adani Enterprises, Adani Ports, Divis Labs, Apollo Hospitals and Tech Mahindra were among the biggest Nifty gainers, while Nestle India, Hero MotoCorp and Eicher Motors were among the stocks that lost the most... Read More

Markets started the week on a firm note and gained over half a percent, in continuation to Friday's rebound. Meanwhile, a mixed trend on the sectoral front kept the traders busy wherein stocks from IT, metal and pharma space witnessed rebound while the banking and financials were slightly on the back foot. Consequently, Nifty settled at 18,314.40 levels; up by 0.61%.

Markets are taking comfort from rotational buying across sectors amid mixed global cues. The recent participation from the IT majors is certainly encouraging but sustainability would be the key ahead. Amid all, we reiterate our positive view and suggest continuing with the stock-specific trading approach.

The benchmark indices experienced a significant rebound, with the Nifty ending 101 points higher. This was accompanied by strong buying momentum in Adani stocks, supported by the performance of IT stocks. Among the sectors, the Metal and IT indices outperformed, with the Metal index gaining over 3 percent and the IT index rallying 2.35 percent.

From a technical perspective, after a reversal on the previous Friday, the market continued its positive momentum and formed a bullish candle on the daily charts, which is largely seen as a positive signal. It is believed that the index has completed one leg of a pullback rally and is currently trading near an important retracement resistance zone.

Overall, the market has shown positive signs with a strong bounce back, supported by the performance of specific sectors. However, caution is advised around the important retracement resistance zone, and traders should monitor the levels mentioned for potential market movements. Nifty having strong support at 18200 range while having resistance on higher side at 18375 to 18400 range.

Nifty opened on a flat but gradually recovered to close with gains of 111 points (+0.6 percent) at 18314 levels. The broader market too ended in line with the Nifty midcap 100 and smallcap 100 up 0.6 percent. All sectors ended in the green, except for Banking and Financials. Metals were the top gainers up 3 percent, followed by IT up 2 percent.

The market has resumed its upward journey after taking a pause last week. Positive commentary from US Fed, consistent FII buying and healthy results from Index heavyweights supported the sentiments.

Overall market outlook remains positive with stock-specific action. Over the next few days, investors would take cues from global events like FOMC minutes, GDP numbers in the US, and CPI inflation in UK and Japan.

The Nifty witnessed the continuation of the positive momentum from the previous trading session and ended the day with handsome gains of more than 100 points. On the daily charts, we can observe that the rally which started from the 20-day moving average (18115) has continued today as well. On the upside, the zone of 18350 – 18375 where crucial Fibonacci retracement levels are placed can act as immediate hurdles from a short-term perspective.

The daily momentum indicator has a negative crossover which is a sell signal and suggests that there could be consolidation going ahead as without the support of the momentum indicator it would be difficult for prices to sustain at higher levels.

On the downside, the key hourly moving averages placed in the range 18210 – 18250 shall act as a cushion and provide support in case of a slide. Overall, we still believe that the Nifty is in a consolidation mode and the range of consolidation is likely to be 18000 – 18400.

The domestic market inched higher in anticipation of possible progress in US debt ceiling negotiations. Despite a weak fourth-quarter performance, IT stocks rebounded on account of bargain opportunities and pent-up demand. Investors remain watchful ahead of the release of US FOMC minutes on Wednesday, as the minutes may give some indication of a pause on rate hikes.

The Indian rupee depreciated for the fourth day in a row following weaker Asian currencies. However, the greenback declined versus major currencies in anticipation of a pause in interest rate increases from FOMC next month. A soft landing for the US economy is seen as the biggest risk to dollar bulls.

Technically, spot USDINR is in an uptrend and has psychological resistance at 83 while the support has been placed at 82.50. We expect bullish momentum to continue in the coming days as long as the regional currencies remain weak against US dollar.

Indian rupee closed 16 paise lower at 82.82 per dollar on Monday against Friday's close of 82.66.

Benchmark indices ended higher on May 22 with Nifty above 18,300 supported by metal, IT and pharma names.

At close, the Sensex was up 234 points or 0.38percentat 61,963.68, and the Nifty was up 111 points or 0.61percentat 18,314.40. About 1,724 shares advanced, 1,776 shares declined, and 172 shares were unchanged.

Adani Enterprises, Adani Ports, Divis Laboratories, Apollo Hospitals and Tech Mahindra were among the biggest gainers on the Nifty, while losers were Nestle India, Hero MotoCorp, Eicher Motors, Axis Bank and Coal India.

Among sectors, the metal index was up 3 percent, the information technology index rose 2 percent, while capital goods, oil & gas and healthcare indices were up 1 percent each.

The BSE midcap index added 0.7 percent and smallcap index was up 0.4 percent.

Indian Rupee depreciated today to the lowest levels since February 2023 overall on underlying strength in the greenback and buying of Dollars by the RBI to shore up its forex reserves. However, the weak tone in crude oil prices and positive domestic equities cushioned the downside. US Dollar eased slightly on a dovish statement by Fed Chair Jerome Powell and debt ceiling talks being stalled.

We expect Rupee to trade with a negative bias on risk-off sentiments amid concerns over the debt ceiling talks. However, expectations that crude oil prices may decline further amid sluggish demand from China may prevent a sharp fall in Rupee. Dovish hints by Powell may also support Rupee at lower levels.

Markets participants may remain cautious ahead of FOMC minutes this week. We expect the USDINR spot to trade between 82.40 to 83.30 in the near term.

Gold prices were flat on Monday, as traders looked for more clarity around the U.S. debt ceiling negotiations and the Federal Reserve's interest rate path.

Spot gold was steady at $1,978.32 per ounce by 0843 GMT, while USgold futures were down 0.2percentto $1,978.10.