scorecardresearchMarket Wrap: Bull run continues; Nifty ends in green for sixth consecutive

Market Wrap: Bull run continues; Nifty ends in green for sixth consecutive session

Updated: 16 Aug 2022, 04:05 PM IST
TL;DR.

Sensex closed 379 points, or 0.64%, higher at 59,842.21 while the Nifty50 settled at 17,825.25, up 127 points, or 0.72%. Mid and smllcaps outperformed as both indices on BSE rose more than a percent each.

It was the sixth consecutive session of gains for the Nifty50 while the Sensex settled higher for the third consecutive session.

It was the sixth consecutive session of gains for the Nifty50 while the Sensex settled higher for the third consecutive session.

The domestic market continued enjoying its bull run as key indices the Sensex and the Nifty clocked decent gains on August 16 after macroeconomic data showed India's retail inflation eased in July, boosting hopes that the Reserve Bank of India may slow down on rate hikes.

It was the sixth consecutive session of gains for the Nifty50 while the Sensex settled higher for the third consecutive session.

Sensex closed 379 points, or 0.64%, higher at 59,842.21 while the Nifty50 settled at 17,825.25, up 127 points, or 0.72%. Mid and smllcaps outperformed as both indices on BSE rose more than a percent each.

The market rally is underpinned by improvement in key macroeconomic data.

India's retail inflation (CPI) came at a five-month low of 6.71% in July from 7.01% in June while the factory output, measured by the Index of Industrial Production (IIP), came in at 12.3% for the month of June. Analysts pointed out that both prints were better than what the market had expected.

"The important takeaway from the CPI July print is that the trend of declining inflation is sustaining. CPI inflation has declined from 7.79% in April to 7.04% in May to 7.01% in June to 6.71% in July. The stubborn core inflation also has declined from 6% in June to 5.8% in July," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, observed.

"Inflation is likely to decline again since the good monsoon (104% of the normal) augurs well for food production and will have a benign effect on food prices. However, the RBI will have to remain hawkish for some more time since inflation will remain elevated till December this year. IIP at 12.3% for June indicates that the growth momentum in the economy continues," Vijayakumar added.

A fall in crude oil prices amid recession worries also underpinned market sentiment. Brent Crude traded below the $95 a barrel mark. The rupee rose 14 paise to close at 79.39 per dollar.

"The easing of inflationary pressures has encouraged domestic investors to remain optimistic about the pace of economic recovery. Better-than-expected CPI numbers, aided by a slower increase in food and fuel prices, may limit the pace of rate hikes by the RBI. In the Asian market, the Chinese central bank surprised the market by cutting its interest rates after a weak set of economic data. Following that, oil prices slumped on demand worries," said Vinod Nair, Head of Research at Geojit Financial Services.

Among the sectoral indices, BSE Auto and Realty rose 2.57% and 2.03%, respectively. BSE Oil & Gas, Power, Utilities, Industrials, FMCG, Energy and Consumer Discretionary Goods & Services indices rose more than a percent each.

Nearly 180 stocks, including ICICI Bank, Mahindra & Mahindra, Bank of Baroda, Bajaj Auto and Eicher Motors hit their fresh 52-week highs on BSE.

The overall market capitalisation of BSE-listed firms jumped to nearly 278 lakh crore from 275 lakh crore in the previous session on August 12, making investors richer by 3 lakh crore in a single day.

Technicals

As per Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, the Nifty has held the higher bottom formation on intraday charts and 17,750 would be the trend decider level. Above this, the index could hit the level of 17,900-17,925. On the flip side, a quick intraday correction is possible if the index trades below 17,750 and below it could retest 17,700-17,650.

Rupak De, Senior Technical Analyst at LKP Securities observed that the Nifty has given a falling trend line breakout on the daily chart suggesting a rise in optimism. The momentum oscillator RSI is in the overbought zone; however, no bearish crossover is visible in the indicator.

"The trend is likely to remain positive as long as it remains above the falling trendline. The profit booking in the market may come once the Nifty falls below the trend line. Support on the lower end is visible at 17,700. On the higher end, resistance is seen at 18,000," said De.

Key market data

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Disclaimer: The views and recommendations are those of individual analysts and not of MintGenie.

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First Published: 16 Aug 2022, 03:45 PM IST