Benchmark indices Sensex and Nifty 50 ended the day mildly higher on May 2, as banking shares kept a lid on gains and the tailwind from US Federal Reserve - hinting no rate hike plan - faded on Dalal Street.
At close, the Sensex was up 128.33 points or 0.17 percent at 74,611.11, and the Nifty50 was up 43.40 points or 0.19 percent at 22,648.20. About 1,762 shares rose, 1,591 fell, and 79 were unchanged.
The broader market fared better than large-caps with the BSE Midcap index ending around a percent higher while the BSE Smallcap ended 0.3 percent higher.
India VIX, The measure of volatility, shot up over 5 percent on expiry of weekly derivatives contracts.
Sector Scan
Among sectors, automobile space was buoyed by the strong April sales of most car companies. A fall in Brent crude prices also aided sentiment for oil marketing companies, lifting shares of IOC, BPCL and HPCL higher, propping up the Nifty Energy index by a percent.
On the downside, shares of private banks saw partial profit booking with names like HDFC Bank, Axis Bank, Kotak Mahindra Bank and ICICI Bank falling 1-3 percent, pulling Nifty Bank index into the red.
Market Outlook
Going ahead, analysts see a possibility of Nifty50 taking a breather and moving in a range. Sameet Chavan, head of technical and derivatives research at Angel One said the immediate support for Nifty50 index is likely to shift higher towards the 22,500 mark, followed by 22,400, which also coincides with its 20-day exponential moving average.
On the upside, Chavan sees the life-time high level of around 22,775 - 22,800 serving as an immediate resistance, before the index can attempt a move towards the 23,000 mark.
The Fed Factor
The recent string of hotter-than-expected US inflation prints had not only downplayed the number of rate cuts anticipated in 2024, but also raised concerns over the possibility of another rate hike in case retail prices stay higher than US Fed's target.
However, Chairman Powell's remark that "it is unlikely that the next rate move will be a hike," eased market concerns over a U-turn in the interest rate trajectory.
Also Read | Powell’s dovish policy may provide relief to markets, again spark hope of early rate cut instead of hike
"While the Fed remains responsive to data, the equity markets reacted positively to the assurance that the next policy adjustment would not involve a rate hike. However, It's essential to proceed with caution, as prematurely declaring victory could occur if the Fed loosens its hold on economic control too early," said Dhawal Ghanshyam Dhanani, Fund Manager, SAMCO Mutual Fund.
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