Domestic equity indices logged seventh straight day of gains on December 6, as the bullish momentum continued with buying in information technology and power names and continuous foreign inflow taking the benchmarks to a new high for a third day.
The Sensex ended 357.59 points, or 0.52 percent, higher at 69,653.73, and the Nifty 82.60 points, or 0.40 percent, at 20,937.70, a new closing high for both the indices. Intraday, the Sensex rose to 69,744.62 and the Nifty 20,961.95.
Market breadth was neutral, as about 1,633 shares advanced, 1,611 declined and 90 were unchanged.
“Post-state elections, market optimism thrives, confirming policy continuity and meeting investor expectations,” said Vinod Nair, Head of Research at Geojit Financial Services. Over the weekend, the BJP scored impressive wins in the three of the five state elections, the last bunch to be held before the 2024 Lok Sabha polls.
“A robust FII reversal is fuelled by receding inflation and dropping yields in both US and Indian markets. The allure of Indian market gains post-China credit rating downgrade and decline in oil prices was followed by ease in geopolitical tensions,” Nair said.
A strong rebound in IT, driven by reduced US recession risks and in anticipation of robust summer demand, fuelled the momentum in the power sector.
"Despite a promising outlook, short-term profit booking may occur due to domestic premium valuation concerns. Further, lingering El Nino risks, a drop in reservoir levels, and reduced sowing may hold RBI to profoundly upgrade H2FY24 growth and reduce future inflation estimates," Nair added.
Also read: Elections likely to trigger policy uncertainties for banks in 2024, predicts Moody's
Stocks and sectors
Broader market indices also closed with gains but underperformed their headline peers. Nifty Smallcap 100 added 0.38 percent, while Nifty Midcap 100 rose 0.25 percent. Nifty 500, the broadest index on NSE, added 0.49 percent.
Sectoral matrix was mixed. Nifty Media was the biggest gainer, rising 2.11 percent. It was followed by Nifty Oil & Gas, Nifty IT and Nifty FMCG, which gained a percent each. Nifty Healthcare was the top loser, down 0.67 percent, followed by Nifty Pharma.
Among Nifty stocks, Wipro was the biggest gainer, rising nearly 4 percent. LTIMindtree, ITC, L&T, TCS and Tata Motors gained 2-3 percent. Adani Enterprises was the top loser, down 2 percent followed by Eicher Motors, Cipla and NTPC.
Outlook for December 7
Rupak De, senior technical analyst at LKP Securities
The index formed a hanging man pattern on the daily chart, suggesting the possibility of a bearish reversal. The bearish formation around the crucial resistance of 21,000 amplifies the bearish sentiment. The support lies at 20,850, below which the market may witness a healthy correction in the short term.
On the other hand, a move above 21,000 might trigger a resumption of the bullish trend.
Ajit Mishra, SVP - Technical Research, Religare Broking
Noticeable traction in key sectors is fuelling momentum in the index, however, we can’t ignore the possibility of some consolidation now.
Traders should maintain their focus on stock selection as we are seeing a catch-up move in the sectors and stocks that were on the sidelines in recent months. Also, avoid contrarian bets in anticipation of a major decline.
Prashanth Tapse, Senior VP (Research), Mehta Equities
Impressive winning streak continued for the seventh straight session as the street is now expecting a strong popular mandate for the BJP in the 2024 Lok Sabha polls. Falling crude oil prices and hopes that the US Federal Reserve will initiate rate cuts in the coming year boosted investor confidence.
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