Dear Trader –
Bluechips left
smallcaps and midcaps behind as the Sensex rallied over 700 points on Wednesday
to scale the 72,000 mark for the first time. Nifty, too, hit a fresh all-time
peak of 21,700 amid all-round buying in banks, auto, metals and IT stocks.
The market rally was
broad-based but Nifty’s 1% rise left smallcap and midcap indices behind as
investors found more value in bluechips after the non-stop rally seen in
smaller stocks.
UltraTech Cement ended
over 4% higher, along with other cement stocks, after Nomura upgraded the
sectoral outlook. Among bluechips, Hindalco and Bajaj Auto ended 4% higher
while heavyweight HDFC Bank advanced 1%.The combined market capitalisation of
all BSE-listed stocks rose by Rs 2.5 lakh crore to Rs 361.4 lakh crore.
Here are the key
factors behind today’s rally –
1) Global markets – As investors continue to believe that the
US Fed may cut interest rates as early as March 2024, a positive momentum was
seen across global equity markets on Wednesday.On Tuesday, Wall Street stocks
continued their positive momentum, with the Dow and broad-based S&P 500
both rising 0.4%, while the tech-rich Nasdaq Composite Index climbed 0.5%.
2) Santa Claus rally effect –
Markets are known to
follow seasonal patterns and Santa Claus rally, which is usually seen in the
last five trading days of December and the first two sessions of January, is
one such pattern that seems to be playing out in the market now.During this 7-day
period, Nifty has a track record of giving positive returns in the last 19 out
of 22 years.
3) FII hand – The chorus for ‘Sell China,
Buy India’ strategy seems to be growing louder on Wall Street. NSDL data shows
that FIIs have been net buyers to the tune of Rs 57,275 crore in December. On
days when FIIs have been on the selling side, domestic institutional investors
have been generously filling in the gap.
4) Friendly crude – Brent crude oil prices have
been trading around the $80 mark, which is turning out to be a big tailwind for
India. Oil prices were stable on Wednesday after the previous day’s strong
gains as investors monitored Red Sea developments, with some major shippers
resuming passage through the area despite continued attacks and broader Middle
East tensions.
5) Banking on banks – Nifty Bank on Wednesday
ended 1.17% higher at 48,282 with analysts eyeing 49,000 level on Thursday.Banks
have been a bit late to this party but now seem ready to breakout from the
current range. PSU Banks are the strongest while private banks are expected to
play catch up,Nifty PSU Bank outperformed with 2% rally. PNB and Bank of Baroda
ended with gains of 3-4%.
6) Red Sea relief – Despite the attacks by
Yemen’s Iran-backed Houthi militia, major shipping firms such as Maersk and
France’s CMA CGM were resuming passage through the Red Sea following the
deployment of a multinational task force to the region. The news also bolstered
investor sentiment,who were worried about shipping disruptions.
Nifty futures opened at 21510.00 points against the previous close
of 21472.30 and opened at a low of 21507.65 points. Nifty Future closed with an
average movement of 200.70 points and rise of around 217 and 21690.00 points…!!
At the start of intra-day trading December gold opened at Rs.63198
fell from a high of Rs.63389 points to a low of Rs.63179 with a rise of 328 points,a
trend of around Rs.63353 and December Silver opened at Rs.75231, fell from a
high of Rs.75279 points to a low of Rs.74700 with a decline of 16 points, a trend
of around Rs.75010.
Meanwhile,
Healthy macro data and
rally in global markets helped Nifty touch new highs even in the holiday
season. While the derivatives monthly expiry on Thursday may infuse some
volatility, the undertone remains bullish with the market making steady gains
in the last few weeks.
Technically,
the important key resistances are placed in October Nifty future are at 21690 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 21737 – 21880 levels. Immediate support
is placed at 21606 – 21474 levels.
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