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Taking Stock | Market ends higher for third day; positive global cues, IT and metal stocks lift sentiment

The market is expected to remain volatile as concerns about the health of global economy mount and continuing foreign fund outflow, expert say

June 27, 2022 / 05:06 PM IST

Indian equity benchmarks continued their up-move for the third consecutive session on June 27, making a strong start to the week on positive global cues, a fall in oil prices and buying in IT and metal stocks.

At close, the 30-share Sensex was up 433.3 points, or 0.82 percent, at 53,161.28, while the broad-based Nifty gained 132.8 points, or 0.85 percent, to 15,832.05, their best showing in more than two weeks.

Gains in the global markets, steady monsoon progress and a decline in crude and collapse in metal prices, raised hopes of domestic inflation trending down in the second half of FY23, boosted sentiment.

“Declining commodity prices have been lifting the exhausted domestic equity market during the recent sessions,” said Vinod Nair, Head of Research, Geojit Financial Services. Despite this positivity, the underlying fear of a recession, tightening monetary policy and inflation can trigger another round of volatility.

“A strong revival in the market can only be expected when the economy stabilises from these uncertainties and when FIIs turn net buyers,” Nair added.

Close

The battle with inflation, however, could be prolonged. Deputy RBI governor Michael Patra recently said that retail inflation will likely get back to the mid-point of the Reserve Bank of India’s medium-term target of 2-6 percent in two years, given the raft of measures initiated by the monetary and fiscal authorities.

According to Deepak Jasani, Head of Retail Research, HDFC Securities, “Falling inflation expectations and easing of Covid-19 restrictions in China that lifted global commodities helped assuage sentiments in global markets.”

The indices made a strong start to the day, with a gap up opening of 1.4 percent. They traded positive before profit-booking by traders incited volatility in the last session, with the market closing near the day’s lows.

IndexPricesChangeChange%
Sensex59,332.60515.31 +0.88%
Nifty 5017,659.00124.25 +0.71%
Nifty Bank38,879.85592.00 +1.55%
Nifty 50 17,659.00 124.25 (0.71%)
Thu, Aug 11, 2022
Biggest GainerPricesChangeChange%
Axis Bank758.8519.85 +2.69%
Biggest LoserPricesChangeChange%
TATA Cons. Prod773.45-17.10 -2.16%
Best SectorPricesChangeChange%
Nifty PSU Bank2870.6566.85 +2.38%
Worst SectorPricesChangeChange%
Nifty FMCG42478.50-343.10 -0.80%

Volumes on the NSE continue to be on the lower side, suggesting a lack of conviction to take big bets.

Stocks and sectors

Strength was visible across sectors. The Nifty IT index was the biggest gainer, rallying more than 2 percent. The Nifty metals index registered gains of 1.52 percent, while Nifty auto, realty and FMCG indices were up by close to 0.9 percent.

The Nifty pharma was the weakest performer, ending 0.35 percent higher.

The broader markets also had a good day. The BSE midcap index was up by 0.87 percent and the smallcap surged 1.57 percent.

The India VIX, which indicates the degree of volatility traders expect over the next 30 days, increased 2.21 percent from 20.55 to 21.

Among the top Nifty gainers were Coal India, ONGC, Larsen & Toubro, HCL Tech and Tech Mahindra, which ended the day with gains between 2.65 to 3.12 percent.

Apollo Hospital, Eicher Motors, HDFC Life, Kotak Mahindra and Britannia were the top Nifty losers, slipping between 0.3 to 1.14 percent.

Among specific stocks, a long build-up was seen in City Union Bank, Persistent Systems and Firstsource Solutions, while a short build-up was witnessed in HDFC AMC, Cholamandalam Finance and Biocon.

Of the 3,575 stocks traded on the BSE, 2,386 advanced, 1,038 declined and 151 remained unchanged.

Outlook for June 28

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

While the change in mood has come as a major relief, the optimism may remain for a few more sessions before the market turns volatile amid concerns over a slowing global economy due to rate hikes and continued foreign fund outflows.

The market is trading near its important resistance level and the texture of the chart suggests a strong possibility of a quick intraday correction from the current levels.

For day traders, 15,900 and 15,925 will act as immediate resistance levels. Below it, the correction wave is likely to continue to 15,750-15,700.

On the flip side, of the index goes past 15,925, it can move to 16,000. Contra traders can take a long bet near 15,700 with a strict support stop-loss of 15,660.

Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services Ltd

Investors continue to assess the outlook for US rate hikes and the potential for a recession.

The European Central Bank’s three-day forum in Portugal's Sintra concluded on June 27 against the backdrop of recession fears. Investors will closely watch a panel discussion between Federal Reserve Chairman Jerome Powell, European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey on June 29 for insights into a trade-off between curbing inflation while still trying to ensure a soft landing for the global economy.

Investors will also keep an eye on a slew of economic data due this week from the US, UK, India and China. We expect market volatility to continue this week, with the Nifty approaching its strong resistance around the 16,000 mark.

Ajit Mishra, VP-Research, Religare Broking Ltd

We feel global cues will continue to dictate the trend. Besides, domestic factors like the upcoming GST council meet will also be in focus.

We reiterate our positive yet cautious view on markets, citing the hurdle at 15,900. A decisive breakout can fuel the recovery to the 16,200 zone or the correction will resume.

We have seen select sectors and themes doing well, so the focus should be more on identifying the stocks from such themes while keeping a check on leveraged positions.

Disclaimer: The views and investment tips of 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: Jun 27, 2022 05:06 pm
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