The Indian stock markets made a positive start to the week on Monday, ahead of the Federal Open Market Committee Meeting (FOMC) scheduled on September 21 and despite the weakness displayed by the other Asian and European markets. Today’s strong closing broke the three-day losing streak that was witnessed on Indian bourses.
At close, the 30-pack BSE Sensex rose 300 points, or 0.51 percent, to reach 59,141 while the broader Nifty gained 91 points, or 0.52 percent, to end at 17,622.
The US markets continued their decline on Friday, which impacted sentiment in the Asian markets in the morning. Barring SET Composite of Thailand and Jakarta Composite of Indonesia, the Asian markets ended in the red. European markets also witnessed a weak opening in the early session amid hawkish stance of European Central Bank, Bank of England and concerns about the energy situation.
“The global market was expected to battle volatility as we approach the Fed policy announcement, while the latest inflation data remained above the estimates," said Vinod Nair, Head of Research, Geojit Financial Services.
The policy tone indicates hawkish measures, suggesting elevated hikes, leading to the pull-out of FIIs money from the Indian equities last Friday. “However, this trend is expected to be short-lived, as future inflation trend forecast a clampdown, bringing stability in policy stance by the end of this year," added Nair.
Experts suggest that India is enjoying the TINA (there is no alternative) factor, because of which the foreign investors showed some buying interest on Monday. Indian equities markets had tanked close to 2 percent during the previous trading session on Friday after the FIIs had pulled out Rs 1,200 crore from local stocks.
All sectoral indices on the Nifty made a healthy comeback today, except for metals and realty. Selling pressure in these two indexes continued today and they lost 0.95 and 0.45 percent, respectively.
The PSU Bank index was the top gainer today as it rose by more than two percent. FMCG and Auto indices gained close to one percent each.
M&M, Bajaj Finance, SBI Life Insurance, Adani Ports and HUL were the top gainers on the Nifty, gaining between two to three percent each.
The top losers comprised of Tata Steel, Tata Motors, Britannia, ICICI Bank and Power Grid Corporation, with declined between 2 to 2.5 percent each.
Stocks & sectors
On the BSE, the BSE FMCG index was the top gainer with gains of close to one percent. The BSE Auto index was up 80 basis points while the Financials were up close to 60 bps.
BSE Metals and Telecom were the top sectoral losers on the BSE, with each skidding more than one percent. BSE Realty declined close to one percent.
The broader indices ended on a mixed note with both BSE Midcap and Smallcap losing some ground today. BSE Midcap was down 16 bps and BSE Smallcap lose 17 bps.
The India VIX, which indicates the degree of volatility traders expect over the next 30 days, edged towards the 20 level mark as it rose marginally by 0.6 percent from 19.8 to 19.94.
A long build-up was seen at the counters of Ambuja Cements, Escorts and Max Financial Services while a short build-up was witnessed in Canfin Homes, Delta Corp and GNFC.
Among specific stocks, a volume spike of more than 300 percent was seen in Canfin Homes and Escorts while Ambuja Cement witnessed a volume spike of close to 85 percent.
Close to 200 stocks scaled their new 52 weeks high on the BSE which included Ambuja Cements, Bank of Baroda, Escorts, IndusInd Bank and Thermax.
Outlook for September 20
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd
While the undertone of the market remained volatile, a strong relief rally after the recent slump helped benchmark indices to rebound. While European markets and most of the Asian pack continued their downward spiral, the underperformance of the Indian markets last week prompted investors to buy the beaten-down stocks. Despite the recovery, markets may gyrate sharply intra-day amid global uncertainty.
Technically, after an early morning fall, the Nifty found support near 17450/ (which is double bottom support level) and bounced back sharply and hovered between 17580-17665 levels. If the index trades above 17550 then the pull-back formation is likely to continue. Above which, the index could touch the 20 day SMA level at 17675. On further upside, the index may rally up to 17800. On the flip side, below 17550 the index could retest 17450- 17400 levels.
Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities Ltd
Markets witnessed a smart recovery as Nifty gained traction amid a cautious tone. The recovery was seen even as investors reassess aggressive Fed tightening bets amid looming recession risks. Traders now look forward to the important FOMC monetary policy meeting on September 20-21.
Technically speaking, the biggest support to watch out will be at 17429 and below the same, Nifty could simply drift lower to 17161 mark. Nifty’s hurdles are placed at 17867 and then at 18115 mark.
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