The market is on a strong footing for the second straight session with the benchmark indices opening gap-up on March 6 on the back of positive global cues. Most sectors, barring realty, contributed to this rally, which made investors wealthier by nearly Rs 6 lakh crore in two days.
The BSE Sensex climbed above the psychological 60,000 mark for the first time this month, climbing 505 points or 0.84 percent to 60,314. The Nifty50 surged 138 points or 0.8 percent to 17,733 on top of a 1.5 percent rally seen in the previous session at 1:50pm.
At the same time, Japan’s Nikkei and South Korea’s Kospi gained over 1 percent each, while Australia’s ASX 200 gained 0.6 percent and Hong Kong’s Hang Seng gained 0.2 percent, but China’s Shanghai Composite was down 0.2 percent.
The benchmark Nifty has formed a decent bullish candlestick pattern on the daily charts by sustaining its 200-day EMA (exponential moving average) of 17,583 for yet another session. Now the index needs to surpass the 50-day EMA which coincides with 100-day EMA (17,814) to get a firm direction towards the psychological 18,000 mark, experts said.
“Looking at the technical patterns on long-term charts (monthly negative divergence) and signals coming from the yield curve (inversion of 80 percent), this Nifty up-move looks like a retracement for next fall,” Sagar Doshi, the Head of Technical, Wealth Research at Nuvama Wealth and Investment, says in an interview to Moneycontrol.
The overall bounce till 17,800-18,000 is the maximum possible, but it doesn’t seem to surpass the new high, he believes.
The northward journey or the rebound for two-day after significant correction and consolidation was quite sharp as investors' wealth increased by Rs 5.67 lakh crore since March 3, as the BSE market capitalisation jumped to Rs 265.66 lakh crore, up from Rs 259.99 lakh crore on March 2.
"The trend reversal in the Nifty led by banking and metals has more legs to go. When the market gets oversold, as happened in recent weeks, the bounce back triggered by short-covering can be sharp," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
He said the rally in banking stocks may gather momentum taking cues from the GQG investment in four Adani stocks. "The oversold IT stocks also have the potential to stage a mild rally. Oil and gas and capital goods segments appear strong," he added.
The Nifty Oil & Gas index is the biggest gainer among sectors, rising over 2 percent, backed by Mahanagar Gas, Adani Total Gas, Gujarat State Petronet, GAIL India, Indraprastha Gas, Oil India, ONGC, IOC, Reliance Industries, BPCL, and HPCL, which gained between 1 percent and 7 percent.
The IT index was the second biggest gainer with 1.2 percent rise. Mphasis, Infosys, Coforge, LTIMindtree, TCS and Wipro gained 1-2.5 percent.
The rally in Adani Group stocks for yet another session also lifted the sentiment on Monday, as Adani Green Energy, Adani Wilmar, Adani Transmission, Adani Power, and Adani Enteprises gained 4-5 percent.
The broader markets were also in action with the Nifty Midcap 100 and Smallcap 100 indices rising 0.9 percent and 1.15 percent on positive breadth. About seven shares advanced for every three falling shares on the NSE.
The momentum was so strong that 226 shares hit the upper circuit, against 170 stocks hovering on the lower circuit, but majority of them from illiquid groups and none of them from 'A' Group which has only liquid stocks.
In the current week, the focus will be on global cues, given a lack of fresh triggers on the domestic front. Fed Chair Jerome Powell's testimony and US jobs data are the crucial factors ahead of FOMC meet which is scheduled on March 21-22.
The market is likely to be rangebound in coming months and the major upward rally can be possible in second half which also depend on the cue from central banks, experts said.
"CY23 is likely to be a year of two halves, with the markets expected to see some correction/consolidation in the first half, followed by some improvement as we progress in the second half," Unmesh Kulkarni, Managing Director, Senior Advisor and Head of Markets and Advisory Solutions at Julius Baer in India, said.
In the near term, he feels, Indian markets need to contend with some key headwinds – a likely extension of the rate hike cycle in the US, an overall slowing economic environment globally, tactical shifts in global flows happening away from India due to the strong outperformance in CY22, which resulted in a much higher valuation premium compared to historical averages, and softening domestic demand, especially with rural demand still remaining weak impaired by inflationary pressures.
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