Signs of inflation gradually coming down and growth picking pace boosted the risk appetite of investors as equity benchmarks the Sensex and the Nifty snapped a three-day losing run on January 13.
US inflation eased in December for the sixth straight month, fuelling hopes that the worst about inflation was behind and is on a sustained downward trend.
The US consumer-price index rose 6.5 percent in December year-on-year, down from 7.1 percent in November. On the other hand, India's retail inflation rose 5.72 percent in December from 5.88 percent in the previous month.
Besides, India's factory output, measured in terms of the Index of Industrial Production (IIP), jumped 7.1 percent in November as against 4 percent in October.
Healthy macro numbers cheered market sentiment. Sensex ended 303 points, or 0.51 percent, higher at 60,261.18 while the Nifty50 closed at 17,956.60, up 98 points, or 0.55 percent.
Mid and smallcaps, however, underperformed. The BSE Midcap index inched up 0.09 percent while the Smallcap index rose 0.22 percent.
Crude oil prices saw an uptick due to the improved demand scenario. Brent Crude traded near the $84 per barrel mark. The rupee jumped 22 paise to a five-week high at 81.33 per dollar on robust domestic macroeconomic data.
Top Sensex gainers: Shares of Tata Steel, IndusInd Bank, Infosys, UltraTech Cement and ICICI Bank ended as the top gainers in the Sensex index.
Top Sensex losers: Shares of Titan, Nestle, Larsen & Toubro and ITC ended as the top losers in the benchmark index.
Most sectoral indices ended with gains. However, Nifty Consumer Durables bucked the trend and fell 1.03 percent with 13 stocks in the red and only two in the green.
On the other hand, Nifty PSU Bank rose 1.35 percent, followed by Nifty Metal which clocked a gain of 1.27 percent. Nifty Bank ended 0.69 percent higher.
Expert's views on markets
Vinod Nair, Head of Research at Geojit Financial Services said easing inflation and brighter Q3 numbers projected by the second set of IT majors are outweighing the cautiousness of the market.
CPI in India and the US cooled off, thereby bolstering expectations of a less aggressive policy. Falling treasury yields and the dollar index are raising investors’ sentiments," said Nair.
Technical views by experts
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas pointed out that the Nifty ultimately posted a positive weekly close, forming a Doji pattern on the weekly chart.
Ratnaparkhi further added that for the last few weeks, the index has been trading above the 20 WMA, which has resulted in a triangle pattern formation on the daily chart. After a recent base formation near the lower end of the pattern, the Nifty witnessed a smart recovery on January 13.
"Going ahead, 18,000-18,050 will be the key area beyond which the index will be set for a larger up move. On the downside, 17,800 will continue to provide a cushion for the index," said Ratnaparkhi.
Amol Athawale, Deputy Vice President - Technical Research at Kotak Securities observed that on the weekly charts, the Nifty formed a long-legged Doji candlestick formation.
He said for the next few trading sessions, the 100-day SMA (simple moving average) or 17,900 would act as sacrosanct support levels. A pullback formation above the same could drive the index to 20-day SMA or 18,075.
"Further upside may also continue which could lift the index to 18,200. On the other hand, a fresh round of selling is possible only after the dismissal of 17,800 and below the same, the index could slip till 17,650-17,600,” said Athawale.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.