Sensex up 1,700 points this week. Will uptrend sustain? Key factors to watch
Premium- Analysts say that softening of commodity prices have helped Sensex and Nifty recover from lower levels
Indian stock markets remained firm today in noon trade and is set to close the week with strong gains. The Sensex was up 300 points near 54,500 while Nifty held above 16,200. So far this week, Sensex is up around 1,700 points. Investor focus will be on quarterly results of IT major Tata Consultancy Services or TCS due later in the day. More importantly, TCS management commentary on outlook on growth environment would be the key thing to watch out for, say analysts.
Overall, analysts expect TCS to report a sequential dip in Q1 margin due to wage hike and increase in other expenses.
Analysts say that Indian markets were in an oversold territory and positive news on downturn in commodity and crude prices, along with easing of foreign investor selling, helped the Indian market recover from lower levels.
Foreign investors sold a net $373.31 million worth of Indian equities up to Thursday - the smallest outflow in five weeks.
“The recovery in Nifty and Nifty Midcap respectively from their recent lows indicates the resilience of the markets and its potential to scale newer heights under a favorable macro construct. The present rally is driven partly by expectations that given the steady decline in commodity prices inflation will start showing a declining trend enabling central banks to go a bit slow on hiking rates, and partly by short covering," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"It is quite probable that central banks may not tighten policy as much as the market feared earlier. If emerging data indicates the possibility of a soft landing for the US economy, the rally may gather momentum. Therefore, commodity prices have to be closely watched."
Nifty Technical Outlook
With Nifty now above 16,200, says Anand James - Chief Market Strategist at Geojit Financial Services, “the question now is on sustainability of the uptrend. "With several signs of a shift from an oscillating trend to a directional one, the prospects of rejection trades or pause in upsides need to be played with caution. For the day, we would see inability to float above 16235 as an opportunity towards the same. If such moves do not extend past 16050 region, expect steady rise to 16340 shortly and 16500-17000 in the coming days."
Derivative Comments
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“Nifty weekly contract has highest open interest at 17000 for Calls and 15000 for Puts while monthly contracts have highest open interest at 16100 for Calls and 16100 for Puts. Highest new OI addition was seen at 16200 for Calls and 15000 for Puts in weekly and at 16500 for Calls and 15000 for Puts in monthly contracts," he said.