Dear Trader –
Propelling Sensex and
Nifty to near record high levels once again, benchmark equity indices on
Wednesday rallied over 1% with the market capitalisation of all BSE-listed
stocks crossing the $4-trillion milestone for the first time in history.
While Sensex ended 728
points higher at 66,902, Nifty advanced 207 points to end at 20,143 as
investors turned attention to bluechip stocks.
Here are 7 factors
that triggered the rally on Wednesday:-
1) Fed commentary – Fed governor Christopher Waller has flagged the possibility
of lowering the interest rate in the months ahead if inflation continues to
come down. Traders are now pricing in a more than 70% chance of rates easing in
May, compared with a 50% chance on Tuesday, CME’s FedWatch Tool shows.
2) FII buying – Foreign investors, who were
on a selling spree in the last two months, have now turned net buyers of Indian
stocks. Tuesday’s data shows that FIIs bought Indian shares worth Rs 784 crore.
So far in the month, net FII buying stands at Rs 2,901 crore, according to NSDL
data.
3) Revenge of
bluechips – Bluechip
stocks, which have been under selling pressure in the last few weeks amid
investor preference for smaller stocks, are now showing signs of an uptick.
Wednesday’s rally was supported by both Nifty Bank and Nifty IT indices, which
rallied 1.5% each. Axis Bank ended 3.7% higher while HDFC Bank also moved up
2%.
4) Global markets – Asian shares mostly fell on Wednesday although a strong
report on US consumer confidence and hopes the Federal Reserve is finished with
its aggressive interest rate hikes sent shares higher on Wall Street.Japan’s
benchmark Nikkei 225 declined 0.3%. Hong Kong’s Hang Seng dropped 2.4%, while
the Shanghai Composite fell 0.5%. Meanwhile, European stocks edged up 0.1% in
early trading, with Frankfurt shares leading gains after the German data.
5) Crude oil – Oil edged higher on
Wednesday as investors turned cautious ahead of a crucial OPEC+ meeting to
decide output policy in the coming months, while a supply disruption caused by
a storm in the Black Sea provided a lift for prices.Brent crude futures climbed
76 cents to $82.23 a barrel at 3.42 pm. US West Texas Intermediate (WTI) crude
futures gained 73 cents, or 0.93%, at $77.11 a barrel. However, both benchmarks
have fallen by more than 16% in the last two months.
6) Bond yields – Treasury yields hit multi-month lows on Wednesday after a US
Federal Reserve official made fresh hints of interest rate cuts. The two-year
yield hit its lowest since mid-July at 4.69% and the benchmark 10-year yield
fell 6 bps to its lowest since September at 4.28%.
7) Dollar Index – The dollar index, which
tracks the greenback’s movement against the world’s six major currencies, rose
0.12% to 102.87 on Wednesday, although it has declined 3.7% in the past month.
The dollar index falling below 103 is positive for equity markets.Also, on
Wednesday, the rupee ended at 83.3250 against the dollar, little changed from
its close at 83.3325 in the previous session.
Nifty futures opened at 20000.00 points against the previous close
of 19936.70 and opened at a low of 19980.20 points. Nifty Future closed with an
average movement of 163.00 points and decline of around 206.30 and 20143.00 points…!!
At the start of intra-day trading December gold opened at Rs.62602
fell from a high of Rs.62602 points to a low of Rs.62322 with a decline of 55 points,
a trend of around Rs.62330 and December Silver opened at Rs.75326, fell from a
high of Rs.75650 points to a low of Rs.75089 with a rise of 41 points, a trend
of around Rs.75340.
Meanwhile,
Nifty’s recent
crossing of the psychological level of 20,000 and the BSE market cap’s ascent
to the $4-trillion mark signals the start of a fresh momentum. Domestic
liquidity has provided support, but the lack of foreign inflows due to high US
bond yields has been a hindrance. Fortunately, interest rates in the US have
peaked, and the dollar index is declining, which is expected to attract foreign
institutional investor (FII) inflows into the Indian equity market.
Technically,
the important key resistances are placed in October Nifty future are at 20143 levels,
which could offer for the market on the higher side. Sustainability above this
zone would signal opens the door for a directional up move with immediate
resistances seen at 20188 – 20303 levels. Immediate support is placed at 20008 –
19939 levels.
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