Closing Bell: Nifty ends just shy of 14,500, Sensex above 49K led by IT, auto stocks

Buoyed by Positive global cues, tech stocks together with auto stocks powered the Nifty closer to the 14500 mark. While we did see profit booking in metals during afternoon trade, the sheer momentum in IT & Auto kept the bulls in total control ahead of Q3 earnings.

Markets started the week on a robust note led by positive global cues and strong earnings from IT behemoth TCS. Despite a tepid show by banking stocks, the Nifty managed to end with gains of 1% to close just shy of 14,500 levels. The broader markets underperformed wherein both Midcap and Smallcap ended flat. On the sector front, IT and Auto were the top outperformers in today’s trade whereas Metal, Capital Goods and Oil & Gas ended with losses.

The anticipation of better than expected earnings season combined with supportive global cues aided the upbeat start. Going forward, stock-specific volatility would remain high as earnings season would gain pace. Further, key macro data like CPI, WPI and IIP would also be actively tracked by investors. Amid all, we reiterate our positive yet cautious stance on markets and advise aligning positions according to the prevailing trend.

Index opened a day with gap and managed to hold the bullish stream for a day and closed a day near good hurdle zone of 14500 with gains of nearly one percent forming a dragonfly kind of Doji candle pattern on the daily chart. Going forwards index has shifted its support to 14400-14300 zone if managed to hold above-said levels we may see the index to march towards 14550-14600 zone which is immediate hurdle on the higher side.

Improved outlook for 3rd quarter earnings along with strong global cues helped Sensex to breach 49,000 mark. The rally in the market was led by the IT sector backed by firm earnings results, however, small and mid-cap stocks were under pressure. Hopes of a new US stimulus to be unveiled this week created an upbeat movement in Wall Street while profit booking is seen in the European markets. This ongoing rally is being fueled by strong Q3 earnings preview, foreign fund inflow and optimism around Union Budget 2021.

Indian rupee has recoveredfrom the lowbut stillendedlower at 73.38 per dollar, amid buyingsawin the domestic equity market.It opened 23 paise at 73.47 per dollar against previous close of 73.24 and traded in the range of 73.37-73.50.

: Benchmark indices ended at fresh record closing highs with just shy away from the 14500 level.

At close, the Sensex was up 486.81 points or 1% at 49,269.32, and the Nifty was up 137.50 points or 0.96% at 14,484.80. About 1423 shares have advanced, 1672 shares declined, and 137 shares are unchanged.

Tata Motors, HCL Tech, Infosys, HDFC and Wipro were among major gainers on the Nifty, while losers were Tata Steel, Bajaj Finance, Bajaj Finserv, Reliance Industries and L&T

Among sectors, IT index rose 3 percent, Auto index added 2.6 percent and FMCG and Pharma indices rose 1 percent each, while metal and PSU Bank indices shed 1 percent.

Rupee traded in a range manner between 73.30-73.50 with weak tone in early morning sessions as the dollar index takes supports near $89.50. But looking capital markets liquidity inflows rupee weakness was measured near 73.50 as it keeps taking support near 73.40-73.55 zone for now. Crude prices higher and Gold in softer tone its looks rupee can be in the range of 73.00-73.60 for some time before big announcement kicks in from the US on stimulus package.

Gold prices touched a near six-week low, and are currently trading near $1,837. U.S. Treasury yields have put pressure on the bullion prices. The US 10-year Treasury yield was trading firm above 1%, which helped the US dollar to reach a near three-week high.

Federal Reserve Vice Chair, Richard Clarida's comments on Friday, also pushed gold and silver prices lower, when he said that the U.S. economy was headed for an "impressive" year, helped by coronavirus vaccines, and the potential for larger government spending.

However, negative US nonfarm payroll data is likely to support bullion prices. The US economy unexpectedly shed 140,000 jobs in December, the first decline since April, while the jobless rate remained at 6.7%. U.S. President-elect, Joe Biden, on Friday, hinted at more direct pandemic relief to families, including $2,000 stimulus checks, after seeing the monthly NFP data.

According to the CFTC Commitments of Traders report for the week ended January 5, net long for gold futures gained +10,446 contracts, to 279,318 for the week. Speculative long positions jumped +8,134 contracts, while shorts dropped -2,312 contracts, this is positive for gold prices.

The worsening pandemic is curbing global economic growth, and is likely to keep gold prices firm. The overall number of global coronavirus cases has topped 86.37 million, while the deaths have surged to more than 1.87 million, according to the Johns Hopkins University.

Gold prices are likely to find support at the 200-days EMA at $1,830 per ounce, while key resistance is likely to be seen around the 50-days EMA at $1,878.

J Kumar Infraprojects received Letter of Acceptance (LoA) from Gujarat Metro Rail Corporation (GMRC) Limited for "Design, construction and completion of Underground stations and tunnel from Surat Railway station to Chowk Bazar Ramp worth of Rs 8,66,00,00,000 and USD 1,03,11,647.

Gold prices reversed course on Monday from a near six-week low touched earlier in the session, although a stronger dollar and higher U.S. Treasury yields capped bullion's gains.

TCS reported strong revenue growth of 4.1% qoq/0.4% YoY in CC terms, beating our and consensus estimates. Despite salary hike impact, Adj. EBIT margin expanded 40bps QoQ on the back of revenue acceleration, operating efficiencies and forex.

It raise FY21/FY22/FY23E EPS by 2.8%/4.0%/4.6%, factoring in Q3 beat. It believe that TCS is well poised to benefits from acceleration in cloud adoptions and digital transformation opportunities, considering its end-to-end capabilities. However, valuations are rich. Maintain hold with a target price of Rs 3,150 (earlier Rs 3,000) at 26x Mar’23E earnings.