Closing Bell: Sensex gains, Nifty at 18,750; metals shine

Taking Stock: Market ends marginally higher ahead of Fed outcome; metals outshine

The BSE midcap index added 0.2 percent and smallcap index gained 0.4 percent.... Read More

The Nifty opened gap up today and witnessed rangebound price action throughout the day. On the daily charts, we can observe that the Nifty has managed to close in the positive for the third consecutive day. It is slowly inching higher towards the previous swing high 18778 which once taken out shall lead to further upside.

The hourly and daily momentum indicators are providing divergent signals which is likely to align once we get a decisive move on either side. Interestingly the Bank Nifty has closed in the negative today. Overall, the uptrend is intact, and we expect it to reach levels of 18800 in the short term. In terms of levels, 18630 – 186200 shall act as a crucial support zone while 18778 – 18800 shall act as an immediate hurdle zone.

As far as Bank Nifty is concerned, the index has closed in the negative today. It has been trading in a narrow range around the 20-day moving average (44000). We expect the Bank Nifty to hold on to this support and resume its upmove. Short term target is placed at 44500.

Markets managed to end marginally higher, in continuation of Tuesday’s surge. After the flat start, the Nifty gradually inched higher as the day progressed however a mixed trend across sectors capped the momentum. It almost retested the recent swing high and finally closed at 18,755.90 levels. Amid all, metal and energy packs posted strong gains while banking and IT remained subdued.

The recent recovery in the Nifty index lacks decisiveness due to underperformance from the banking index and we expect this divergence to end soon. Meanwhile, buying in heavyweights like Reliance has played a critical role in keeping the tone positive. Amid all, we reiterate our view to stay selective and prefer sectors/stocks that are attracting consistent buying interest.

Markets exercised caution ahead of the outcome of the US FOMC meeting on Thursday, but selective buying in metals and oil & gas stocks helped key indices log gains for the third straight session.

Technically, the Nifty took support near 18700 and bounced back sharply but failed to surpass the important level of 18775. The short-term formation of the market is still in the bullish side but below 18700, we could see a quick intraday correction.

For traders, 18775 would be the immediate breakout level to watch out and above the same, the index could rally till 17900-17950. On the other side, below 18700, the selling pressure is likely to accelerate and below the same the index could retest the level of 18600-18575.

The domestic indices rebounded after an initial phase of profit booking, driven by encouraging WPI inflation data and positive global cues, while selling in IT and banking stocks kept a check on gains.

The favourable decline in US inflation, driven by lower energy prices, and speculation about a potential pause in the Fed rate hike campaign, brought comfort to global equities. However, the persistence of higher core inflation levels may compel the Fed to maintain its hawkish tone during today’s policy announcement with indication of a prolonged pause.

Indian rupee ended 27 paise higher at 82.10 per dollar on Wednesday versus Tuesday's close of 82.37.

Benchmark indices ended with marginal gains in the rangebound session on June 14.

At close, the Sensex was up 85.35 points or 0.14% at 63,228.51, and the Nifty was up 39.70 points or 0.21% at 18,755.90. About 1884 shares advanced, 1604 shares declined, and 114 shares unchanged.

Top gainers on the Nifty included Tata Consumer Products, Tata Steel, Grasim Industries, JSW Steel and Power Grid Corporation, while losers were IndusInd Bank, Bajaj Finance, Axis Bank, Hero MotoCorp and Bharti Airtel.

Except bank and Information Technology, all other sectoral indices ended in the green, with metal, FMCG, oil & gas and power indices up 0.5-1 percent.

The BSE midcap index added 0.2 percent and smallcap index gained 0.4 percent.

Gold trades steady after inching lower in the yesterday's session, as Treasury yields rebounded, while traders firmed up bets the Federal Reserve would stand pat on interest rates after data showed U.S. consumer price gains slowed in May. The annual pace of US inflation eased last month to its lowest level in more than two years, climbing to 4%, down from 4.9% which was reported earlier on annual basis. However, we did not see any change in the Core CPI data, which was reported at 0.4%- in-line with expectations.

After the inflation data, probability chart for June meet showed more than 90% chance for a pause, which is supportive for safe haven asset; however there was no change in July meeting scenario which continued to show a possibility of a 25bps rate hike.

Risk appetite in global markets increased as China cut interest rates for the first time in 10 months, as the government sought to shore up a slowing economic recovery.

Market participants will be a bit cautious ahead of the Fed policy meet scheduled later today. Along with that, focus today will also be on the UK GDP and US PPI data. Broader trend on COMEX could be in the range of $1925- 1965 and on domestic front prices could hover in the range of Rs 58,800 – 59,500.

Crude oil price edged higher with the benchmark NYMEX WTI Crude oil was trading up by 1.0% at $70.12 per barrel on Wednesday. Investors are optimistic about the demand outlook after China's decision to cut borrowing costs and the expectation for further stimulus to boost up its economic growth. Meanwhile, news that the US is planning to buy about 12 million barrels of oil this year to refill its depleted emergency reserves supported sentiment. On the macro front, US consumer inflation declined in line with estimates, adding to expectations that the Federal Reserve will pause interest-rate hikes for the first time in 15 months.

On the technical front, we expect crude oil prices to rally further in today’s session. For the day, NYMEX WTI crude oil has resistance at $73.19 per barrel and finds support at $67.70 per barrel. MCX Crude Oil June future has support at Rs 5670 per barrel and resistance at Rs 5905 per barrel.

Indian Rupee rose to a one-month high on reports of corporate inflows and positive domestic equities. WPI inflation declined by 3.48% in May compared to -0.92% in April. It deflated for the second consecutive month.

The weak Dollar also supported Rupee while some recovery in crude oil prices capped sharp gains. US Dollar declined on rising expectations of a pause in rate hikes by the US Federal Reserve. US CPI declined to 4% in May from 4.9% in the previous month and slipped below the forecast of 4.1%. Core inflation was in line with the forecast at 5.3%.

We expect Rupee to trade with a positive bias on weakness in the Dollar and expectations of a no rate hike by the US Federal Reserve. A rise in risk appetite in global markets may also support Rupee. However, a positive tone in crude oil prices may cap a sharp upside. We expect the USDINR spot to trade between 81.60 to 82.50 in the near term.

-During FY23, sector revenues grew 14% YoY, led by metros and c-circles
-Bharti/Jio gained 80 bps/120 bps while Vodafone Idea lost 140 bps market share
-Bharti’s gains came mainly from rural markets, Jio's gains were from urban markets
-Over FY23-25, expect sector revenues to grow at 12% CAGR led by tariff hikes
-Delays in tariff hikes could accelerate market share shifts

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Gold prices traded higher on Wednesday, with the spot gold price at Comex was trading up by 0.32% at $1951 per ounce. Gold August future contract at MCX were trading up by 0.13% at Rs 59295 per 10 grams by noon session.

Gold prices recovered on today’s session as US Consumer inflation data showed inflation is slowing on an annual basis, increasing expectation that the Fed will pause at its meeting ending today. US inflation rose at a 4% annualized in May, in line with consensus estimate. Investors are now waiting for the outcome of the Federal Reserve policy meeting and its forward policy guidance due later today. The CME's Fed watch tool sees a 95% probability that the Federal Reserve will leave rates unchanged but a 63% probability for a 25-basis point hike in July.

On the technical front, we expect, looking at the daily time frame, that Comex Gold can correct further to the $1910/$1895 level if it breaks the support of the $1930 level. For the time being, $1984 remains the major supply area. MCX Gold August future is likely to find support at Rs 58780 and resistance at Rs 60170.