Domestic benchmark equity indices ended the special Muhurat trading session on October 24 with strong gains, aided by positive sentiment in global markets and optimism for corporate earnings in India.
Muhurat trading is a special one-hour trading session held by the bourses on the occasion of Diwali.
The Nifty 50 index closed higher by 0.9 percent to 17,7308 points, while the BSE-Sensex ended at 59,831.7 points, up 0.9 percent.
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"India is today looking like a pearl in the ocean with benefits from food security, domestic demand driven economy, PLI scheme across manufacturing and defence and strong banking system with decade low NPAs," said Amit Kumar, founder at Fintrekk Capital.
Here are the factors that moved the market this muhurat trading session:
Strong global markets
US markets ended with more than 2 percent gains on October 21, aided by dovish commentary from some US Federal Reserve (the Fed) members on the interest rate trajectory, and a rally in the US Treasury bond market.
A Wall Street Journal report suggested that the US Fed could be set to raise the interest rate by another 75 basis points (bps) at the November policy review, and debate the possibility of tapering future rate hikes.
Short covering from FPIs
The slump in global bond yields likely forced foreign investors to trim their short positions in index futures, which have nearly halved during the previous week.
“FPIs are unlikely to sell heavily in the near term. But they will become sustained buyers only when the dollar starts declining,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Corporate earnings
Strong corporate earnings from ICICI Bank and Kotak Mahindra Bank also provided support to the benchmark indices, given the large weight of both the lenders in the indices.
ICICI Bank surged nearly 2 percent after the lender reported better-than-expected net profit and loan growth for the quarter ended September. The private sector lender reported a net profit of Rs 7,557.8 crore for the reported quarter, a year-on-year growth of 37 percent while its loans grew 23 percent on-year.
Similarly, Kotak Bank rose nearly 1 percent after the bank reported a net profit growth of 27 percent on-year to Rs 2,580.7 crore, which was better than a CNBC-TV18 poll of Rs 2,336.4 crore. The lender reported over 20 percent on-year growth in the loan book, indicating a strong demand environment.
Technical View
Technical analysts suggested that the benchmark Nifty 50 will continue to face tough resistance at 17,850-17,900 levels, and sustainability of the rally will hinge on the index crossing those levels.
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