BackStock market rebounds: Is it a relief rally or fresh bull trend — explained with 5 reasons
Stock market experts believe that Dalal Street has relatively remained strong if we compare the current dip against the global bourses
PremiumStock market today: After trading weak during second fortnight of current month, key benchmark indices finally witnessed strong buying interest duribng Friday deals. By 1:15 PM on Friday, Nifty 50 index shot up to the tune of 0.75 per cent, Sensex today surged around 0.65 per cent whereas Bank Nifty index went up around 0.70 per cent.
In broad market, BSE small-cap index went northward and locked 0.65 per cent gains against its yesterday close while BSE mid-cap index skyrocketed around 1.45 per cent in this time. This has triggered speculations in on Dalal Street whether this relief rally would soon turn out a fresh bull trend or not?
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According to stock market experts, in recent sell off due to weakness in global markets, Indian stock market remained relatively strong and hence in case of trend reversal, Dalal Street may witness sharp upside movement and outperform other global bourses. They said that US shut down is falling on 1st October and hence market is expecting that US government would definitely try to avoid that and this would be a big trigger for the global markets. Apart from this, peaking out US dollar and bond yield may also trigger fresh buying in equities by FIIs.
Triggers to watch out for
Speaking on the triggers that may fuel this relief rally into a new bull trend, Sandeep Pandey, Director at Basav Capital said, “Indian markets relatively remained strong in last one fortnight despite heaby selling by the FIIs. This shows emerging strength of the DIIs on Dalal Street. In recent times, SIP book has grown up to record levels and it is expected to gain further strength."
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Speaking on global triggers that may help current rally to further strengthen, Saurabh Jain, Vice President — Research at SMC Global Securities said, “FIIs are getting counter balanced by DIIs and hence we can expect sharp upside in Indian equity market once profit booking triggers in bond and currency market. Today, pharma and other PSU stocks have witnessed strong buying interest on Dalal Street."
Jain went on to add that recent sell off was mainly due to some particular Nifty heavy weights like Reliance Industries, Infosys and HDFC Bank, which widened the sell off levels in Nifty 50 index. Otherwise, most of the quality stocks were able to seep through this sell off phase.
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Asked about the levels that would confirm fresh leg of bull trend on Dalal Street, Ganesh Dongre, Senior Manager — Technical Research said, "Market is expecting that Nifty 50 may soon close above 19,850 levels as Nifty Future is quoting above this crucial mark. Once the 50-stock index closes above this level, one can assume another 400 points rally on Nifty 50 index. If the index sustains above 20,100 levels for more than two sessions, then one can assume that fresh set of bull trend has begun on Dalal Street.
Top 5 reasons to look at
On top 5 reasons that may help current relief rally to turn into a fresh bull trend, stock market experts reveberated in unison, “Top 5 resons that may cement the current relief rally are rising SIP book in India, DIIs counterbalancing FIIs, ease in crude oil prices, US shut down deadline falling on 1st October 2023." They said that peaking out US dollar rates and drop in bond yield are some other reasons that may cement this relief rally on Indain bourses.
“Recent sell off in the global markets including Dalal Street was due to rise in crude oil prices but it has failed to make any impact on Indian markets and hence we can expect strong upside on Dalal Street once there is trend reversal in global cues," said Saurabh Jain of SMC Global Securities.
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 decisions.
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