Why Sensex, Nifty has been rising for last nine sessions — explained
Stock market today: Due to weakness in US dollar, all key benchmark indices have been in uptrend for last nine session
PremiumStock market today: After surging for eight straight sessions, key benchmark indices — Nifty, Bank Nifty and Sensex opened higher during Thursday morning deals. Nifty today opened at 17,807 and went on to hit intraday high of 17,827 whereas Sensex today opened at 60,364 and climbed to intraday high of 60,423 mark within few minutes of stock market opening bell today. Similarly, Nifty Bank index opened at 41,680 and went on to hit intraday high of 41,798 mark.
According to stock market experts, weakness in US dollar can be attributed as major reason for rise in Sensex, Nifty, Bank Nifty and other broad market indices. They said that after US Fed's dovish stance on interest rate hike, Dollar Index has been continuously sliding and this has fuelled FII's buying interest in emerging markets, which includes Indian stock market. Expecting weakness in the US dollar to further continue in near term, they advised stock market investors to look at banking, auto, capital goods and realty stocks as they are domestically driven segments.
US dollar rate
Speaking on why Indian stock market has been rising for more than a week, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "In the wake of inflation concern, US Fed had gone hawkish on interest rate hike that led to rise in Dollar Index from around 90 levels to 110 levels. This triggered FII's selling in Indian stock market and other emerging markets. But, now US Fed has turned dovish on interest rate hike and hence US dollar rate has been nosediving for near one fortnight. This has forced FIIs to fish out their money from the currency market and pump in equities. If you look at the last one week trend, FIIs have turned net buyers and I am expecting this trend to further continue as weakness in the US dollar is expected to continue further."
Speaking on outlook for US dollar, Anuj Gupta, Vice President — Research at IIFL Securities said, "Dollar Index has immediate support placed at 100 levels and on breaching this support, the index may go down towards 98 and 96 levels respectively. So, we are expecting FIIs buying to pick momentum in near term as they would be switching positions from currency to equities and other assets."
Anuj Gupta of IIFL Securities went on to add that Nifty has given breakout above 17,200 levels and it is facing resistance at 17,850 levels. Once it breaches this hurdle if will face another hurdle at its recent swing high of 18,120 levels. Similarly, Nifty Bank is facing hurdle at its recent swing high of 41,850 levels. Once Nifty and Bank Nifty breaches its resistance around swing high levels, we can expect fresh rally on Dalal Street.
"Banking stocks are better placed in comparison to other segments as Nifty Bank index is close to its swing high levels," said Anuj Gupta.
Leaders for fresh rally
Advising stock market investors to look at domestic-market driven segments, Avinash Gorakshkar said, "As US dollar is expected to remain under pressure, my suggestion to positional investor is to look at segments that are driven by domestic market. I am expecting banking, auto, capital goods and realty segment to drive the fresh rally on Dalal Street."
Stocks to buy today
On stocks to buy for better return in near term, Avinash Gorakshkar said, "In auto segment, one can look at Mahindra & Mahindra (M&M), Tata Motors and Ashok Leyland. In banking segment, ICICI Bank, Axis Bank and Kotak Mahindra Bank is my pick among private sector stocks whereas in PSU bank shares, my top picks are Bank of Baroda and State Bank of India (SBI)."
For those who want to buy real estate shares, Avinash Gorakshkar advised shares of DLF, Shobha and Godrej Properties.
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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