Taking Stock | Sensex, Nifty stretch winning run to third day; realty, IT stocks shine

Indian equity benchmarks continued their winning momentum for the third straight day on September 12 amid sliding oil prices. The recent monthly purchase managers’ index (PMI) data, goods and services tax (GST), direct tax numbers and automobile sales were better than expected and lifted investor sentiment.

The flagship BSE Sensex reclaimed the 60,000 mark, climbing 322 points, or 0.54 percent, from the previous day to close at 60,115. The broad-based Nifty advanced 103 points, or 0.58 percent, to 17,936.35.

"Domestic economy is witnessing strong vigour and the same is assisting a steady growth in Indian equities,” said Vinod Nair, Head of Research at Geojit Financial Services. “A 15.5 percent YoY increase in bank credits during August suggests that the economy is recovering rapidly.”

He, however, said due to rising food prices, domestic inflation is predicted to rise from 6.7 percent in July, which could add volatility in the short-term.

Adani Ports was the biggest Nifty gainer, rising 3.77 percent. It was followed by Titan, Tech Mahindra, Divi’s Labs, Axis Bank, UPL, Eicher Motors and Tata Steel that rose 1-3 percent.

Coal India was the biggest loser, down 2.53 percent. Shree Cement, Nestle India, HDFC, HDFC Bank and Hindustan Unilever were the other losers.

Buying was seen across market segments and sectors. IT, defence and public sector banks were on investor radar.

The Nifty realty was up 2.2 percent, Nifty media 1.98 percent, while Nifty IT and Nifty PSU bank gained more than 1 percent each.

Broader markets also outperformed headline indices. The Nifty smallcap 100 index advanced 1.33 percent, while the Nifty midcap 100 rose 0.97 percent.

Outlook for September 13

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd

In recent sessions, falling global crude oil prices and a sliding US dollar index have encouraged domestic investors to increase their equity exposure.

Technically, the Nifty has formed a shooting star pattern near the important resistance level. A trend reversal is possible only after the dismissal of 17,850. Above the same, the index could touch 18,000-18,100.

On the flip side, below 17,850 selling pressure is likely to increase and could retest 1,7750-17,700.

Rupak De, Senior Technical Analyst, LKP Securities

The Nifty started on a positive note following strong global cues. The daily momentum indicator RSI remains in the green crossover.

The short-term trend is likely to remain strong as long as the index remains above 17,700. On the higher end, the Nifty has resistance at 18,000-18,100 zone. Support is seen at 17,880 and 17,770.

Deepak Jasani, Head of Retail Research, HDFC Securities

The Nifty seems to be facing resistance at the previous high of 17,992 (the intraday high was 17,980.6).

The broader market continues to do well, while largecaps are seeing rotational buying and profit-taking, leading to a slow crawl up.

The Nifty can continue to face resistance at 17,992, while 17,807 can act as support in the near term.

Market participants should be wary of the rising inflation and resulting removal of liquidity from the system. During CY21 there has been some central banks namely Russia, Korea, Ukraine who have raised rates.

Rising inflation risk and hence withdrawal of ultra-easy monetary policy by global central banks (mainly Federal Reserve) may trigger a sharp rise in bond yields which can cause risk assets to correct sharply.

Hence one can remain invested with a vigilant eye on the move in yields world over which can result in sharp 10-15% correction from the current levels.