After opening in the green, Indian benchmark indies Sensex and Nifty extended their gains sharply on the back of buying action in banking counters and firm global market cues. The BSE Sensex rose 1100 points to 71,800 level while the Nifty50 crossed the 21,650 mark in Monday’s trade.
The bias was strongly skewed in favour of the bulls with 38 Nifty stocks trading in the green, 11 in the red while one remained unchanged. The top gainers were ONGC, Adani Enterprises, SBI Life, HDFC Bank and Sun Pharmaceuticals. The top losers were Cipla, Dr Reddy’s Laboratories, Bajaj Auto ITC and Divi’s Laboratories.
Selling by foreign institutional investors (FIIs) and a spike in crude oil prices capped further upside. FIIs net sold shares worth about Rs 2,144 crore rupees on Thursday, extending their selling streak to a seventh session, exchange data showed.
Here are top factors aiding the rally:
1. Buying in RIL
Sharp rally in Sensex can be attributed to the strong movement in Reliance Industries (RIL) which was the largest index contributor in the day. The stock price gained amid strong buying action in eargy stocks in the aftermath of the Middle East crisis. The crisis in the Red Sea shipping route began after Yemen-based Houthi rebels launched frequent attacks on commercial shipping vessels plying through the route in November as a fallout of the Israeli-Palestinian war, which started in early October 2023.
2. Buying in HDFC Bank shares
HDFC Bank was among the top Sensex contributor in the trade on Monday. HDFC Bank stock rose nearly 2% after the banking regulator allowed LIC to up its ownership in the country’s most valued lender. India’s banking regulator allowed LIC to acquire an additional 4.8% stake in HDFC Bank, and the stake could be raised to a maximum of 9.99% by January 24, 2025. Currently, LIC owns 5.19% stake in HDFC Bank as of December 2023.
3. Firm global markets
Most major Asian indices were trading positive after the China regulators took new steps over the weekend to support the market.
Japan’s Nikkei 225 was trading at 36,132.90, up by 381.78 points or 1.07% while China’s Shanghai Composite was hovering at 2,918.81, up by 8.59 points or 0.30%. Hong Kong’s Hang Seng was up nearly 0.98% around 9:30 am India time.
On Friday, frontline indices on the Wall Street ended mixed. While Dow 30 closed at 38,109.40, up by 60.30 points or 0.16%, the S&P 500 settled at 4,890.97, down by 3.19 points or 0.07%. The Nasdaq Composite finished at 15,455.40, lower by 55.13 points or 0.365%.
4. Fed rate cut hopes
The continued moderation in US consumer inflation raised hopes of an early US Fed rate cut. The US Fed rate decision in slated for late night hours on Wednesday. No rate cut is expected by the Fed, but the commentary will be keenly watched, said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Expert Take
“Amidst a volatile session on Thursday, Nifty slipped further on the monthly expiry day, concluding the week with a percent cut, just above 21,350. For the second consecutive week, Nifty experienced a decline, with bears seemingly in control, selling into any minor bounce. The charts exhibit a distorted pattern with a ‘Lower Top Lower Bottom’ formation on the daily chart, signaling a bearish reversal,” Sameet Chavan, Technical Analyst at Angel One said.
He said that on a broader scale, a ‘Head and Shoulders’ pattern confirms a bearish trend which does not bode well for the bulls and suggests potential challenges in the short term.
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