Indian market created history as bulls pushed benchmark indices beyond crucial psychological levels in the holiday-shortened week. The S&P BSE Sensex surpassed Mount 45K while Nifty50 managed to hold 13,100-13,200 levels.
The S&P BSE Sensex rose 2.1 percent while the Nifty50 climbed 2.2 percent for the week ended December 4 while the action was more prominent in the broader market space.
The S&P BSE Mid-cap index rose 2.8 percent while the S&P BSE Smallcap index closed with gains of 2.6 percent for the week ended December 4.
There are as many as 65 stocks in the BSE500 index that rose 10-50% in just 4 sessions that include names like KNR Construction, Tata Power, Maruti Suzuki, Sun Pharma, Adani Enterprises, Hindalco, Oberoi Realty, SAIL, SpiceJet, Tata Chemicals, and Adani Power, etc. among others.
The market climbed fresh new highs on the back of vaccine news, better than expected GDP data for the September quarter as well as dovish commentary by the Reserve Bank of India (RBI) back home despite rise in the inflation forecast to boost growth.
Small & midcaps which remained in limelight through November and now in December are likely to attract buying interest in the last month of the year 2020 along with banking and finance stocks, suggest experts.
“Market has also witnessed a shift in investor preference to broader markets led by a rally in mid & small-cap stocks. The banking sector is likely to continue to stay in focus in the coming week as SC may pass its verdict on the moratorium,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.
“Importantly, in the near-term, we feel that PSU Banks can outperform as price and valuation wise they are still much cheaper than private banks and they have not yet participated in the rally in the market and banking industry,” he said.
In the last three months, private banks were up by 30 percent while PSUs (Nifty PSUB index) were even less than halve. On a valuation basis, the Price to Book Value of PSUBs is at 0.4x compared to 2x of the NiftyBank Index.
Investors would also watch out for the manufacturing data which is to be released next week. Nair is of the view that any further updates on the vaccine developments and revised discussions regarding US stimulus can inject more optimism into the global markets.
Technical View:
Nifty formed a strong bullish candle on the daily charts on Friday. On a weekly basis, the market has followed the bullish continuation formation. The Nifty50 index closed comfortably above the psychological mark of 13,000 and Sensex has crossed the level of 45,000 on a closing basis.
During the week, FIIs bought Rs 7,236 crore of equities while domestic institutions sold equities to the tune of Rs 4,118 crore in the cash segment.
As per data, FIIs are putting more money into Technology and Service sectors. The dollar index has also helped emerging markets to perform better than expectations, suggest experts.
“In the coming week, Nifty 50 index would face major hurdle at 13350/13400 levels, which is nearby, however, the Bank Nifty should outperform and move to 31000 levels without any major efforts. The Strategy should be to buy on dips with a final stop loss of Nifty 50 index at 13100,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities told Moneycontrol.
“The credit policy has boosted the sentiment heavily. The Bank Nifty closed above the level of 30000 under the leadership of Private as well as PSU banks,” he said.
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