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Taking Stock | Indices shrug off Fed's ultra-hawkish commentary, zoom over 2.5%

Today's rebound indicates the domestic economy's resilience in comparison to its global peers

August 30, 2022 / 05:04 PM IST
Stock Market, Share Market

Stock Market, Share Market

The Indian indices quickly overcame the bearish sentiments set by the US Federal Open Market Committee at its meeting at Jackson Hole, last Friday. After the steep slide on Monday (August 29), the markets bounced back on August 30 with a bang on the last trading day of the month. They not only erased yesterday’s losses but also made handsome gains for the week. This showed the resilience of Indian markets compared to the rest of the world.

At close, the headline BSE Sensex was 1,564.45 points or 2.7 percent up at 59,537 while the broader Nifty ended the day with a gain of 446.4 points or 2.58 percent at 17,759.3.

The positive tone for the day was set by the largely positive cues from the Asian peers even as the US markets again tumbled on Monday. Stocks in Asia climbed as investor sentiment stabilised following a rout sparked by the Federal Reserve’s commitment to a sustained period of restrictive monetary policy to quell inflation.

Though the markets witnessed a gap-up opening, the bulls quickly took charge and left no chance for bears to make any inroads. The strong opening of the European markets also aided the sentiments in the afternoon.

The rise today was strong and steady and could be a part of a relief rally led by short covering as well as value buying after the recent fall as experts still believe India is going to be an outperformer in coming years.

Close

“Today's rebound indicates the domestic economy's resilience in comparison to its global peers and although the markets are currently at premium valuations, continued support from foreign investors aided domestic stocks to inch higher”, said Vinod Nair, Head of Research, Geojit Financial Services.

Sectors in swing with the progress of the domestic economy should be able to do well compared to the rest, Nair added.

On the other hand, The Wall Street brokerage firm, Bank of America Securities has sharply revised upward its Nifty forecast in the range of 18,500-19,500 points by December, after two successive downward revisions in June and earlier this month.

IndexPricesChangeChange%
Sensex58,065.471,276.66 +2.25%
Nifty 5017,274.30386.95 +2.29%
Nifty Bank39,110.051,080.40 +2.84%
Nifty 50 17,274.30 386.95 (2.29%)
Tue, Oct 04, 2022
Biggest GainerPricesChangeChange%
IndusInd Bank1,219.2563.00 +5.45%
Biggest LoserPricesChangeChange%
Power Grid Corp208.45-2.35 -1.11%
Best SectorPricesChangeChange%
Nifty Metal5769.30175.35 +3.13%
Worst SectorPricesChangeChange%
Nifty Pharma13233.45114.50 +0.87%

The strength of the markets can be gauged from the fact that all stocks on the Nifty made gains and there were no losers today.

Bajaj twins – Bajaj Finserv and Bajaj Finance along with IndusInd Bank, Tech Mahindra, and Tata Motors were the top gainers on the Nifty, each gaining between 3.9 – 5.4 percent.

Among sectors, Nifty Realty shone the most with gains of 3.49 percent and was closely followed by the financials which gained ~3.4 percent. Nifty IT, Auto, Metal, and FMCG also made gains of more than 2 percent each.

Stocks & Sectors

On the BSE, the BSE Realty index gained 3.51 percent while the BSE Bankex and BSE Finance gained more than 3 percent each.

The broader indices too displayed overall strength as they ended the day on a strong note with BSE Midcap gaining 1.9 percent and BSE Smallcap rising 1.4 percent.

The India VIX, which indicates the degree of volatility traders expect over the next 30 days, declined sharply by 5.66 percent from 19.82 to 18.7.

A long build-up was seen in the stocks of DLF, Bajaj Finserv, and SRF while a short build-up was seen only in the stock of Piramal Enterprises.

Among specific stocks, a volume spike of more than 290 percent was seen in Oberoi Realty, while the stocks of Piramal Enterprises and Aarti Industries witnessed a volume spike of ~247 and 205 percent, respectively.

More than 220 stocks touched their 52-week highs on the BSE including ABB, Adani Enterprises, Adani Transmission, Bajaj Auto, Bank of Baroda, Escorts, and ICICI Bank.

Outlook for September 1

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd

A strong bounce back in local benchmark indices came on the back of a recovery in Asian and European indices. The focus seemed to have shifted from a hawkish Fed stance to expectations of strong Q1 GDP numbers. Despite volatility and an uncertain global macro environment, the rally shows that India would remain a good long-term bet.

We are of the view that the short-term market structure has changed from negative to positive due to a strong pullback from lower levels. But due to temporarily overbought conditions, we may see range-bound activity in the near future.

For traders, 17,550 or the 20-day SMA could be an important level to notice. Above the same, the index could accelerate to the level of 17,800-17,850. On the other hand, an uptrend below 17,500 would be weak. If the Nifty crosses the 18,000 level, then the index could surge to 18,300-18,350.

Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities Ltd

Markets bounced back sharply as traders eye the buying opportunity. The good news is that the Nifty snapped its two-day losing streak which was primarily ignited by hawkish comments from Federal Reserve Chairman Jerome Powell at the Jackson Hole economic conference last Friday.

The positive takeaway judging by Nifty’s spectacular close is that the benchmark and many momentum stocks have reversed the pessimism course after the famous Jackson Hole sell-off. Technically speaking, all bullish eyes now will be on Nifty’s psychological 18,000 mark with the next goalpost being at the 18,605 mark. The Nifty line on the sand is at the 17,421 mark.

Ajit Mishra, VP - Research, Religare Broking Ltd

Markets made a remarkable recovery and gained over two and a half percent amid mixed global cues. After the gap-up start, the benchmark moved from strength to strength till the end and settled around the day’s high. All the sectoral indices participated in the move wherein banking and financials contributed the maximum. In line with the trend, the market breadth was also inclined strongly on the advancing side.

Markets have completely engulfed the recent decline with a decisive up move however sustainability would be critical for a further uptick. While the global cues are still mixed, upcoming domestic data like core sector and auto sales numbers will be on the radar for cues. We recommend maintaining a positive yet cautious stance and suggest preferring top-performing sectors like banking, financials, auto, FMCG, and realty for long positions.

Disclaimer: The views and investment tips of investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
Gaurav Sharma
first published: Aug 30, 2022 05:04 pm
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