The domestic equity market put up a strong show on June 9 and snapped a four-day losing streak amid heightened volatility and not-so-encouraging cues from the global markets that led to wide swings in the benchmarks. Markets tracked weak global cues in the morning trade but a smart recovery led by oil & tech stocks in the last session aided the markets to close the day with a gain of more than 0.75 percent.
At close, the 30-pack BSE Sensex was up 428 points or 0.78 percent at 55,320 while the Nifty ended the day with a gain of 121.85 points or 0.74 percent at 16,478.
The stocks of oil companies and Index heavyweight Reliance Industries (RIL) rallied as the crude scaled its 13-week high price at $123 per barrel on June 8. A report from a global research firm indicated a jump of 14 percent in gross refining margins of oil companies which also aided their rally today. The sentiments were also enhanced by the latest AMFI data that showed that the domestic flows remained strong in May.
Despite volatility, mutual fund equity schemes registered net inflows of Rs 18,529 crore in May, up from Rs 15,890 crore in April. Monthly contributions to systematic investment plans (SIPs) rose above Rs 12,000 crore after a month at Rs 12,286 crore.
“The market continued to be dominated by a volatile global market with investors weighing the impact of the upcoming global central bank meetings; however, the domestic market reversed its losses during the closing hours due to positive movements in the US futures”, said Vinod Nair, Head of Research at Geojit Financial Services.
FIIs are cautious ahead of the Fed policy even though the market may have factored in an interest rate hike of 50bps, due to the risk of hawkish measures. European markets traded lower as investors are worried about the impact of rate rises ahead of a European Central Bank meeting later in the day.
Stocks & Sectors
Today’s recovery was widespread and barring Metals and PSU Banks, all sectoral indices ended the day on a strong note. Nifty Metals was down 1.31 percent while PSU Bank index was down 0.29 percent at the close. Pharma was the top gainer of the day as it edged higher by 1.2 percent. Nifty IT also gained close to 1 percent aided by the weakening Rupee, while the FMCG index ended with a gain of 0.5 percent.
The broader indices showed strength and made smart gains across the board today with BSE Midcap gaining 0.46 percent and BSE Smallcap rising 0.24 percent.
Despite the volatile session in the first half, the India VIX, which indicates the degree of volatility traders expect over the next 30 days, declined 3.51 percent from 19.83 to 19.14 as the markets traded in one direction in the second half.
Dr Reddy’s Labs, BPCL, Reliance, Eicher Motors, and SBI Life Insurance were the top Nifty gainers with each ending the day with gains between 2.43 to 2.95 percent.
Tata Steel, Shree Cements, Tata Motors, Grasim, and NTPC were the top losers of the day, losing between 1.2 to 3.86 percent.
Among specific stocks, the long build-up was seen in Concor, Biocon, and Tata Communications while short build-up was witnessed in Strides Pharma, Tata Steel, and Vedanta.
Of the 3,438 stocks traded on the BSE, there were 1,770 advances for 1,540 declines and 128 stocks remained unchanged.
Outlook for June 10
Ajit Mishra, VP - Research, Religare Broking Ltd
Markets took a breather and gained over half a percent on the weekly expiry day. The benchmark opened with a down gap tracking weak global cues and traded lacklustre in the first half. However, the tone changed with a strong rebound in the select index majors from the energy, banking, and IT pack in the latter half. Consequently, the Nifty ended near day's high to close at 16,500 levels. The broader indices, midcap and smallcap, ended higher in the range of 0.2-0.4%.
Markets have been witnessing volatile swings in a broader range and most sectors are trading in tandem with the trend. We reiterate our cautious stance and recommend focusing more on sector/stock selection. Among sectors, auto and oil & gas look strong to us while metals may continue to trade subdued so plan your positions accordingly.
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd
Nifty snapped a 4-day losing streak amidst short covering. The positive takeaway from today’s trading is that the Nifty started to edge lower towards the 16,250 mark in the early morning session but managed to stage a modest rebound and most importantly, ended at the highest level of the day. The positive catalysts fueling a rally was Dow Futures bouncing back, the India volatility index dropping 3.5% to 19.40, and Reliance Industries shares clocking sharp gains.
Technically speaking, the downside risk for Nifty is still seen at 16,121, and honestly speaking, the perma-bulls will have to really find reasons to take the index above its biggest hurdles at the 16,795 mark.”
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