Closing Bell: Nifty ends above 17,900, Sensex rises 418 pts; PSU banks rally

Bulls on Dalal Street kept the momentum going as Sensex zoomed past the psychological 60,000-mark and Nifty inched towards 18000 level on the back of softening inflation and strong FII buying in the current month. While global factors remain hazy, India is seen as a bright spot in today's challenging times.

Technically, the market is consistently forming higher high and higher low series formation, indicating continuation of an uptrend in the near future.

The Nifty has also formed a bullish candle on daily charts that also supports the uptrend. However, a quick intraday correction is not ruled out if the index trades below 17850, and below the same it could touch 17700-17680 levels. On the flip side, above 17850 the first upside target for the index would be 18000 and on further upsurge it could move up to 18175.

Nifty is continuing its northward journey thanks to continuous buying by FIIs and the cool-off in crude oil prices, however there is a risk of some profit booking after a 7-day winning streak as Nifty is approaching the psychological level of 18000.

On the downside, 17700 will be the immediate support level while 17500-17400 is a strong demand zone at any pullback.

PSU Banks and IT stocks helped Nifty today to move above the 17900 mark, however some profit booking was seen in auto names. HDFC twins recouped all initial losses that led to a recovery in Bank Nifty from lower levels.

Bank Nifty is consolidating near 39500 level where we can expect some profit booking towards 38700-38400, zone while if it sustains above 39500 level then we can expect a move towards 40000 level.

India has been an outperformer over the last 45 days relative to both EM and DM peers, gaining for cooling inflation expectations as a commodity importer as well as reducing equity risk premia, as a growth market. FII flows over the last 45 days have totalled $1.5 bn, more than double the inflows from domestic institutions.

Domestic retail investors have not participated in the recent rally as evidenced in their single stock futures net long position having contracted to $8.5 bn – for perspective, when Nifty was at 18000 in early April, Retail net long in stock futures was at $12 bn.

This suggests that there may still be further room for participation as well as dry powder to cushion any falls caused by global macro factors. Banks, Industrials and Autos have been the leaders and continue to attract incremental flows. While Metals names have seen some short covering, weakening global growth impulses would act as headwind to any meaningful upward revisions to earnings estimates. IT appears most vulnerable in this environment, due to its leverage to US & EU growth.

Nifty has remained above the falling trend line, confirming the continuation of the ongoing bull run. The up trend remains intact as the barometer index has not shown any weakness.

The popular momentum oscillator is in a deep overbought zone but has no bearish crossover, suggesting a continuation of bullish momentum. On the higher end, resistance is seen at 18000-18100. On the lower end, support is visible at 17700.

Markets extended up move for yet another session and gained over half a percent. After the flat start, the benchmark gradually inched higher as the day progressed however marginal profit taking in the final trades trimmed some gains. Eventually, the Nifty ended higher by 0.7% at 17,944 levels. Meanwhile, mostly sectoral indices ended higher.

The buoyancy in the global markets, especially the US, combined with favorable domestic factors viz. improving macros, consistent foreign flows, etc. are helping the markets to maintain the prevailing trend.

We thus reiterate our bullish view and suggest using any intermediate dip or pause to create fresh longs. The scheduled weekly expiry may result in some whipsaws so plan accordingly.

Nifty has staged a strong recovery in the past few weeks. This move has pushed the markets out of the consolidative/corrective phase it was in since past few months. Any correction in the near term should be used for buying for the medium term uptrend.

An extended phase of consolidation is possible before the index attempts to move towards the 18600 mark. IT stocks remain strong while Metals continue to consolidate. Value is seen in select midcap stocks.

Consistent participation by FIIs is the backbone of the current rally in the domestic market. This reversal in the FII trend is owed to the resilience showcased by the Indian economy even as inflation continues to plague the western markets.

Declining commodity and oil prices also instilled confidence in foreign investors. Western markets were weak ahead of the release of the US FOMC meeting minutes.

Benchmark indices ended higher on August 17 with Nifty closing above 17,900 led by PSU bank, power and Information Technology stocks.

At Close, the Sensex was up 417.92 points or 0.70% at 60,260.13, and the Nifty was up 119 points or 0.67% at 17,944.30. About 1941 shares have advanced, 1401 shares declined, and 119 shares are unchanged.

Bajaj Finserv, Hero MotoCorp, HDFC Life, Bajaj Finance and Bharti Airtel were among the major Nifty gainers.

The losers included M&M, Apollo Hospitals, Tata Motors, Cipla and UltraTech Cement.

Except auto, all other sectoral indices ended in the green with PSU Bank and Information Technology up 1-2 percent.

BSE midcap and smallcap indices added 0.5 percent each.

Indian rupee ended higher by 21 paise at 79.44 per dollar against Friday's close of 79.65.

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Most of its portfolio is contracted with strong counterparties like SECI & NTPC.

As per reports, the company in a fray to buy 700 MW RE capacity from vector green, reported CNBC-TV18.

Torrent Power was quoting at Rs 581.30, up Rs 0.55, or 0.09 percent.

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Brokerage firm reduced its FY23-F24 EPS estimates by 8% each and reduced NAV estimates by 6% which reflects MTM project level price & cost changes.

The company is a beneficiary of a new residential demand upcycle. And like it for steadily improving balance sheet & reasonable relative valuation.

The higher new launches could increase the pace of presales, reported CNBC-TV18.

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