The surprisingly dovish stance by the US Federal Reserve triggered a global rally that catapulted Indian equity benchmark to new highs on December 14, with most sectoral indices closing in the green.
Investor wealth, reflected by total market cap of BSE-listed companies, rose Rs 3,91 lakh crore, rising to Rs 355.10 lakh crore.
The Sensex closed 929.60 points, or 1.34 percent, higher at 70,514.20, and the Nifty ended 256.40 points, or 1.23 percent, up at 21,182.70. Market breadth was in favour of gainers. About 1,860 shares advanced, 1,573 declined and 96 remained unchanged.
The US Fed overnight hinted it would cut interest rates earlier than was expected by the market. It is likely to start cutting rates as early as March 2024, and market observers say the Reserve Bank of India will follow suit shortly.
“Firm US indices may continue to rub off on our markets and we are now eyeing 21,500 in Nifty. We reiterate our preference for banking & IT majors and suggest staying selective in others. Though the midcap and smallcap pack is also aligned with the move, traders should maintain extra caution in stock selection seeing the overbought conditions,” said Ajit Mishra, SVP - Technical Research, Religare Broking.
Stocks and sectors
Broader market indices also zoomed, performing in-line with the headline indices. Nifty midcap 100 and Nifty smallcap 100 advanced 1.31 percent and 0.85 percent, respectively. Nifty 500, the broadest index on NSE, added 1.19 percent.
Barring Nifty media, healthcare and consumer durables, which slipped marginally, all indices closed with gains. Nifty realty and Nifty IT were the biggest gainers, up 3.88 percent and 3.5 percent.
Also read: Nifty, Sensex hit fresh highs on Powell booster, rally still has steam left
Among the Nifty pack, Infosys, Tech Mahindra, LTI Mindtree, HCLTech and Wipro were the top gainers, jumping 3-4 percent. Power Grid was the biggest loser, down about 2 percent, followed by HDFC life Insurance and Nestle India.
Outlook for December 14
Rupak De, senior technical analyst, LKP Securities
The index has broken out of consolidation, driven by an increase in long positions compared to short trades among participants. Sentiment remains robust as the index maintains a position comfortably above crucial moving averages. Support is at 21,000, where Put writers have significant position. The index has the potential to advance towards 21,400 and beyond.
Prashanth Tapse, Senior VP (Research), Mehta Equities
The US Fed's decision to leave the rates unchanged lifted the world equity market mood, including India which saw benchmark indices reach yet another record high on the back of a frenzied buying support. Falling crude prices and foreign investors pumping in money into domestic equities also bolstered sentiment.
With India continuing to post strong growth numbers and hopes of rate cut in the middle of the next year, optimism in equity markets could continue in the medium term.
Vinod Nair, Head of Research, Geojit Financial Services
The market hit a fresh high amid the dovish commentary from the Federal Reserve and suggestions of at least three rate cuts in 2024. The sharp fall in US bond yields improved investor confidence.
An upgrade in India’s GDP forecast, ease in global oil prices, and the RBI's decision to clamp down on inflation to the target level led to a broad-based rally with outperformance from realty and IT.
Aditya Gaggar, Director of Progressive Shares
With a bullish gap, the index breached its congestion zone, which implies continuation of the current uptrend with the downside being protected at 21,020. On the upside, 21,400 can act as a resistance.
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