Closing Bell: Nifty around 19,550, Sensex gains 405 pts; auto, IT, capital goods shine

Taking Stock | Bulls break two-day losing run; Sensex up 405 pts, Nifty nears 19,550

The market breadth was in favour of gainers. Around 2,178 shares advanced, 1,361 shares declined and 121 shares were unchanged... Read More

Indian equities saw a relief rally following its global peers and healthy domestic service PMI data. Nifty opened a gap-up and remained in positive territory throughout the session to close with gains of 110 points (+0.6%) at 19546 levels. Sectorially it was a mixed bag with buying seen in Auto, IT, and Consumer Durables. Markets saw a recovery after two days of fall amid stability in global indices following ease in US Bond yields and a fall in crude oil prices from their recent highs.

Though the market bounced back today, uncertainty persists which would keep the Nifty range bound. Investors would watch out for US weekly jobless claims that would be released late today. Also, the release of US non-farm payroll data along with the RBI policy outcome tomorrow would be key events to watch out for. The World Cup 2023 began today in India, which is expected to have a positive impact on various sectors like Travel & Tourism, Hotels, Consumers, and QSR, thus these sectors are likely to remain in momentum

Indian rupee erased opening gains following recovery in the greenback but ended almost steady ahead of US weekly jobless data and RBI’s rate decision. The rupee was well supported by lower crude oil prices, the central bank’s dollar supply and recovery in the domestic equity markets.

Spot USDINR is expected to trade between 83.10 to 83.35 with the trend remaining sideways to bullish.

Markets staged a recovery on the weekly expiry day and gained over half a percent. After the initial gap-up start, Nifty hovered in a narrow band till the end and finally settled at 19545.75 levels. Meanwhile, a mixed trend on the sectoral front kept the traders busy wherein auto and IT posted decent bounce. The market breadth also ended on the advancing side, thanks to an uptick in the smallcap index.

Participants shouldn’t read much into a single day rebound and wait for the Nifty to reclaim the short term moving average (20 EMA) for sustained recovery. At present, select IT majors are at the forefront while others are playing supportive roles on a rotational basis. We need improvement in the broader participation to change the market course. Amid all, it is prudent to keep a check on leveraged positions and prefer index majors over others.

The positive signal from the PMI data and the correction in the crude price boosted the market sentiment. Reduction in FIIs selling rebound sectors like bank and IT shares today. While regarding RBI policy, positively, the market expects the interest rate to be hold-on as external demand outlook indicates muted trend fearing disinflationary trend in the future.

The Nifty opened gap up and consolidated for most past of the day. It closed with gains of ~110 points. On the daily charts we can observe that Nifty has formed a Morning Star pattern which bullish implications. The recent correction has halted around the 20-week moving average (19320) and now we expect a relief rally over the next few trading sessions.

On the upside we expect the pullback till 19780 – 19800 which coincides with the 50% Fibonacci retracement level and the 20-day moving average. In terms of levels, 19460 – 19480 is the crucial support zone while 19670 – 19700 shall act as an immediate hurdle zone.

Bank Nifty opened gap up and thereafter consolidated for most part of the day. On the hourly momentum indicator we can observe positive divergence and crossover which is a bullish sign. We expect the Bank Nifty to provide a pullback till 44800 – 45000 from short term perspective.

Recovery in global markets followed by a sharp drop in international crude oil prices and steady trend in US bond yields triggered a relief rally in domestic shares after two sessions of losses. Buying in IT, banking, auto and capital goods stocks led the upsurge whereas selective profit-taking in metals, power and healthcare stocks trimmed gains of key benchmark indices.

Despite the rebound, uncertainty over more rate hikes going ahead coupled with slackening demand and recessionary fears would mean that markets are likely to witness strong bouts of intra-day volatility with a slightly negative bias in the near to medium term.

Technically, as long as the Nifty is holding 19450 level the positive sentiment is likely to continue. On the higher side, the 50-day SMA or 19610 (Simple Moving Average) and 19675 would be immediate hurdles. On the flip side, below 19450 level, uptrend would be vulnerable.

The markets began the 5 October trade on a strong note but after an uptick in the initial hour, the Index remained rangebound for the rest of the day and settled at 19,545.75 with gains of 109.65 points.

On sector-wise performance, Media was the best performer followed by IT and Auto whereas profit booking pressure remained in the PSU Banking space. A mixed trend was seen in the Broader markets where Midcaps underperformed while Smallcaps performed in line with the Benchmark Index.

Nifty50 has given a convincing close above the previous candle's high i.e. 19,460 but formed a Spinning Top candlestick pattern which indicates a tug of war between bulls and bears at the higher levels.

Indian rupee ended flat at 83.25 per dollar on Thursday versus Wednesday's close of 83.23.

Benchmark indices broke two-day losing streak and ended higher with Nifty around 19,550.

At close, the Sensex was up 405.53 points or 0.62 percent at 65,631.57, and the Nifty was up 108.20 points or 0.56 percent at 19,544.30. About 2178 shares advanced, 1361 shares declined, and 121 shares unchanged.

Bajaj Auto, Larsen & Toubro, Titan Company, M&M and TCS were among the top gainers on the Nifty, while losers included Power Grid Corporation, Hindalco Industries, Cipla, NTPC and Nestle India.

On the sectoral front, auto, bank, Information Technology and capital goods up 0.5-1 percent, while selling was seen in the pharma, power and PSU Banking names.

BSE midcap index ended on a flat note, while smallcap index added 0.6 percent.

Soumyajit Mukherjee, Jt. President (Sales and Marketing) a Senior Management Personnel of the company tendered his resignation w.e.f. the closure of business hours on or before September 30,2023 in order to pursue his interests outside the organization.

-Downgrade Escorts to reduce from hold, target price Rs 2,500 per share
-TVS Motors- buy call, target price raised to Rs 1,700 per share from Rs 1,500 per share
-Q2FY24 auto results are likely to be positive
-Positive auto results driven by commodity tailwinds
-Positive auto results over operating leverage and some mix benefit
-Our commodity index is down 4 percent for 4Ws and 5 percent for 2Ws sequentially
-Both indices are down by 14 percent in last 6 months
-Focus likely on festive demand, inventory and discounts
-Prefer Maruti Suzuki, M&M and TVS

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Indian Rupee appreciated slightly on decline in US Dollar and a sharp fall in crude oil prices. Upbeat domestic macroeconomic data and positive tone in domestic markets also supported Rupee. India’s Services PMI expanded to 61 in September versus 60.1 in August. However, FII outflows capped sharp gains. US Dollar declined on Wednesday on downbeat US data. ADP added 89,000 jobs in September 2023 as compared to 180,000 in August 2023 while ISM services PMI declined to 53.6 from 54.5 during the corresponding period. US treasury yields also retreated from 16-yeaar highs. However, factory orders increased unexpectedly by 1.2% in August 2023 as compared to -2.1% in July 2023.

We expect Rupee to trade with a slight negative bias on rising US Treasury yields and expectations that US Dollar may recover on hawkish tone of most Fed officials. However, weak crude oil prices and positive global markets may support Rupee at lower levels. Traders may take cues from weekly unemployment claims and trade balance from US. Investors may remain cautious ahead of RBI’s monetary policy tomorrow. USDINR spot price is expected to trade in a range of Rs 82.80 to Rs 83.70.