Bull vs bear: Sensex, Nifty 50 extend rally. Is Indian stock market getting ready for a fresh bull trend?
- Bull vs bear: While key benchmark indices have extended rally for second straight session, small-cap index has climbed to a new life-time peak during Thursday deals
Bull vs bear: Indian stock market extended its rally for second straight session on Thursday. In opening bell today, Nifty 50 index opened flat at 19,674 levels and went on to hit intraday high of 19,781 levels, logging 338 points rally in two straight sessions. Sensex today opened at 65,665 and went on to hit intraday high of 66,054 levels, ascending 1,121 points in two days. Nifty Bank index today opened with upside gap at 44,251 levels and went on to hit intraday high of 44,353 mark, appreciating to the tune of 462 points in two successive sessions.
In broad market, small-cap index opened upside at 39,406 levels and went on to hit new life-time high of 39,477 within few minutes of stock market's opening bell today. Mid-cap index too had a gap up opening at 33,207 levels and the index touched intraday high of 33,239 mark, mising to hit existing record high of 33,245 mark.
As foreign institutional investors (FIIs) tuned net buyers on Wednesday after series of selling sessions, Dalal Street is buzzing with speculations of fresh bull market in near term. According to stock market experts, fresh rally in Indian stock market can be assumed once Nifty 50 index breaches 19,850 levels on closing basis and sustains above 20,000 mark for few sessions. They said that current participatory rally may lead to fresh bull market as FIIs are expected to remain net buyers due to falling US treasury yields and US dollar index.
Is Dalal Street heading for a new bull trend?
Speaking on outlook for Indian stock market today, Kunal Kamble, Sr. Technical Analyst at Bonanza Portfolio said, "The Indian equity market regained their animal spirits on Wednesday as the headline indices Nifty 50 and Sensex close the day with gains of over 1 per cent buoyed by positive investor sentiment as the US CPI inflation data came in at 3.2 per cent, which was softer than expected. Consequently, US bond yield plunged as traders and investors are factoring in that policy rates have peaked and that the Fed may cut rates within the first half of next year. Furthermore, the CPI inflation data for India was released on Monday 13th November 2023 revealing inflation to slow to a 5-month low of 4.87 per cent, while the core inflation fell to 4.2 per cent. This benign inflation scenario was the primary driver for the rally beginning on Wednesday."
FIIs coming back
Pointing towards FIIs' buying on Wednesday, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "After selling for near three months, FIIs turned out net buyers on Wednesday as they bought Indian shares worth around ₹550 crore. This is expected to continue further as US treasury yields have come down from 16 year highs. After soft US inflation data, speculations about US Fed's rate hike has gone donw leading to slide in US dollar rate against major global currencies. Hence, investors are expected to switch money from currency and bond market to other assets including equities."
Speaking on Nifty 50 outlook, Aditya Gaggar Director of Progressive Shares said, "On a daily chart, the Nifty 50 Index has made a long-legged DOJI candlestick pattern and not only breached its falling trendline but also gave a convincing close above its 50DMA (19,580), which shows bullishness in the markets. Now the next critical hurdle for the Index stands at 19,840 while the downside is protected at a strong support zone of 19,550-19,580."
Lok Sabha polls in focus
Pointing towards upcoming union elections due next year and its impact on Indian stock market, Vinay Paharia, CIO at PGIM India Mutual Fund said, "We remain cautiously optimistic on the market from a medium-term perspective. Our caution is because markets are trading at a premium to its current fair value. However, this fair value is likely to grow at a strong pace in the medium-term, hence we remain optimistic from a medium to long term perspective. Globally we are seeing growth slow-down in developed markets due to elevated interest rates along coupled with sticky inflation situation. This will have an adverse impact on export-oriented businesses. In India uptick in discretionary demand in the ongoing festive season and measures by the government to boost rural consumption are the key near-term monitorable. As we inch closer to 2024, we would see increased volatility due to the Union Elections scheduled in May 2024. We are of the view that these are transient factors and would advise long-term investors to look beyond these near-term headwinds to benefit from the long-term India story."
How to find bull trend stocks?
On sectors that may generate alpha return in upcoming bull market on Dalal Street, Kunal Kamble of Bonanza Portfolio said, "As the interest rates cycle seems to have peaked, IT and Technology will be a major beneficiary. The Financial Services sector has consistently received inflows from FIIs over the past few months, which is expected to continue. Moreover, the private capex cycle in the domestic economy has revived, which may attract buying interest from both FIIs and DIIs in the Capital Goods and Infrastructure sectors. Additionally, the Healthcare space has also seen a robust rally on the back of strong earnings and should carry on ahead."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.
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