Closing Bell: Sensex, Nifty end at record highs; metal stocks outperform

Taking Stock | Indices Close At Record Closing High With Sensex Above 48k

Broader markets outperformed the main indices. The BSE midcap index rose 1.4 percent and the smallcap index added 1.3 percent.... Read More

Markets started the week on a buoyant note and gained nearly a percent, thanks to encouraging auto sales number, highest ever GST collections and progress on the vaccine front. The benchmark opened higher but profit-taking in the initial hours erased all the gains. It again regained strength with healthy buying in metals, IT and oil & gas as the day progress. Consequently, the Nifty around the day’s high at 14,133 levels, up by 0.8%. Meanwhile, the broader indices outperformed and ended higher by 1.4 each.

We remain cautiously optimistic on the market and suggest continuing with the “buy on dips” approach until we see a reversal in the trend. Going ahead, earnings, global cues and progress on vaccine drive will dictate the trend. Nifty has an immediate hurdle at 14,250-14,300 zone.

14100 posed a resistance and the markets turned red in a few minutes but the bullish undercurrent is so strong that the Nifty bounced smartly and has closed above 14150. The next level we can aim for would be 14200-14250. But I would still advice caution on the long side with strict stops.

Every dip is being considered by the traders as an opportunity to buy. Today morning’s volatility was brought, fueled by the early rollout of the vaccine in India and positive opening of the European market. The leader was IT stocks boosted by the hope of a strong quarterly result, which will start soon. The global market has kicked off the year on a positive note as investors across the globe are optimistic about economic recovery on the report over vaccine approval & fiscal support.

Index opened day with gap up and after taking some din in the first half index managed to close a day near its high at 14128 with a gain of nearly one percent and formed a hanging man candle pattern on the daily chart. Going forward, strong base is created near 14k mark, any dip near 14k mark will be again buying opportunity and on the higher side immediate & strong hurdle is placed at 14200 zone. Traders can use 14200 zone as profit booking zone.

Emboldened by the likely roll-out of the Vaccine this month, bulls went berserk bolstered by IT & Metal stocks with able support from Pharma stocks. PMI data and renewed buying in select Financials provided buoyancy across the broader markets.

Indian rupee ended 10 paise higherat 73.02 per dollar, amid buying seen in the domestic equity market.It opened 18 paise higher at 72.94 per dollar against Friday's close of 73.12 per dollar and traded in the range of 72.90-73.03.

The market witnessed some swift recovery from its short-term support around the Nifty50 Index level of 13950-13970 today. The expected level should range between 14250-13950, and it’s going to be crucial for the short-term market scenario to sustain above 13950. Technical evidence is still aligned to support the bullish case scenario. As such, we advised investors to buy on intraday correction and look for an exit around the 14250-14270 level in the short term.

Benchmark indices ended at record closing level with Nifty above 14,100 and Sensex above 48,000 level.

At close, the Sensex was up 307.82 points or 0.64% at 48,176.80, and the Nifty was up 114.40 points or 0.82% at 14,132.90. About 2061 shares have advanced, 973 shares declined, and 158 shares are unchanged.

Tata Steel, Hindalco, Eicher Motors, ONGC and TCS were among major gainers on the Nifty, while losers were Hero MotoCorp, Kotak Mahindra Bank, Bajaj Finance, Adani Ports and Asian Paints.

Except bank (down marginally) all other sectoral indices ended in the green led by the metal, IT, auto and pharma. BSE Midcap and Smallcap indices jumped over 1 percent each.

Gold prices started the new year on a high by notching an eight-week peak on Monday, as spiking COVID-19 cases and prospects of tougher restrictions boosted the safe-haven metal's appeal.

Gold prices have rallied above $1,900, and are trading at an eight-week high, due to the rising number of covid-19 cases, and new lockdown measures in major economies. Britain’s Prime Minister hinted at stricter curbs, while Japan has said that it would consider declaring a state of emergency in its capital city area. Safe-haven demand is likely to keep gold prices firm in the short term.

Worries over slower global growth outlook are supporting safe-haven demand in gold. China's manufacturing activity moderated in December due to weak demand. The Caixin China Purchasing Managers' Index was 53.0 in December, against 54.90 in November. Meanwhile, China's official manufacturing PMI, which is focused more on large, state-owned companies, fell to 51.9 in December, from 52.1 in November.

Weakness in the Dollar Index is also keeping gold prices firm. The Dollar Index is currently trading near 89.52, which is sharply lower, compared to the November month high of 94.33. Meanwhile, gold prices are likely to get further direction on Wednesday from the minutes of the U.S. Federal Reserve’s December month meeting.

Gold prices are likely to find support at the 10-days EMA at $1,898 per ounce, while key resistance is likely to be seen around $1,940-1,995 level.

Oil prices touched multi-month highs on Monday on expectations that OPEC and allied producers may cap output at current levels in February as the coronavirus pandemic keeps worries about first-half demand elevated.

Indian rupee is trading higherat 72.99per dollar, amid buying seen in the domestic equity market.It opened 18 paise higher at 72.94 per dollar against Friday's close of 73.12 per dollar.