Domestic equities ended on a strong note, extending their winning run into the third consecutive session on May 30, in light of positive global cues as the risk appetite of investors improved after data showed that US consumer spending rose in April and the rate of rise in inflation slowed.
As reported by Reuters, consumer spending, which accounts for more than two-thirds of US economic activity, increased 0.9 percent last month, and although inflation continued to increase in April, it was less than in recent months. The personal consumption expenditures (PCE) price index rose 0.2 percent, the smallest gain since November 2020, after shooting up 0.9 percent in March.
PCE is one of the key measures to exhibit the trends of inflation and consumer spending in the US economy.
Inflation, the anticipation of more aggressive rate hikes and concerns over growth losing momentum have been the major worries for the markets globally. Though it may be early to say that things are going to improve, the fresh sets of data in the US have boosted sentiment across the globe. Major Asian markets, such as Nikkei, Kospi, Shanghai Composite Index and Hang Seng traded higher.
The recently released meeting minutes indicated a less hawkish tone of the US Fed which seems to have offered some relief, while on the domestic front, the early onset of monsoon has further lifted sentiments.
"Markets have regained some strength citing the less hawkish tone of the US Fed in the recently released meeting minutes. On the domestic front, the early onset of monsoon has further lifted sentiments. Going forward, with earnings season largely behind us, upcoming macroeconomic data i.e. GDP numbers and PMI data and auto sales will be in focus for cues," said Ajit Mishra, VP - Research, Religare Broking.
Sensex jumped almost 1200 points in intraday trade and finally settled with a gain of 1041 points, or 1.90 percent, at 55,925.74 with 26 stocks in the green and four stocks in the red. NIfty50 closed the day at 16,661.40, up 309 points, or 1.89 percent.
Shares of Titan, Mahindra & Mahindra, Infosys, Larsen & Toubro, Tech Mahindra and HCL Tech ended as the to gainers in the Sensex index. On the other hand, those of Kotak Mahindra Bank, Sun Pharma, Dr Reddy's Labs and ITC ended as the laggards in the Sensex kitty of stocks.
Mid and smallcaps outperformed as the BSE Midcap and Smallcap indices ended 2.28 percent and 2.23 percent higher, respectively.
Among the sectoral indices, BSE Consumer Durables jumped 4.41 percent, ending as the top gainer. BSE Realty, IT and Teck indices rose up to 4 percent.
The overall market capitalisation of BSE-listed firms rose to ₹258.4 lakh crore from ₹253.1 lakh crore in the previous session on May 27, making investors richer by ₹5.3 lakh crore in a single day.
Crude oil prices rose as the benchmark Brent Crude traded near the $120 a barrel mark. The rupee gained about 3 paise to end at 77.54.
“With clarity now arising from last week's US FOMC meeting about another 50 bps rate hike in the next few months, the market seems to be taking in its stride the future rate hikes and is now seen reversing the bearish trend. While fears of global recession and a further rise in oil prices lurk, investors are currently engaged in buying after the recent free fall," Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, said.
In the last three days, the Nifty has rallied nearly 800 points and cleared the 16,400 resistance level which is broadly positive.
"For traders, 16,500 would be the trend decider level, above which the positive momentum is likely to continue till 16,750-16,800. Below 16,500, uptrends would be vulnerable. Any further retracement could see the index retest the level of 16,440-16,420,” said Chouhan.
Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in pointed out Nifty successfully bridged the bearish gap registered on May 6, which is present between 16,484 and 16,651 levels. Hence, initially, the upswing should expand further and test its 200-day exponential moving average, which is around 16,750.
"If Nifty manages to close above 16,750, then the next target should be around 17,100. On the downside, today’s gap zone between 16,506 and 16,370 should remain critical support going forward and should present a better entry point on dips. For the time being, traders should make use of any minor dip into the zone of 16,600 to 16,550 to create fresh longs with a stop below 16,500 and look for a target of 16,750," said Mohammad.
As per Mohit Nigam, Head - PMS, Hem Securities, the key resistance levels for Nifty50 are 16,800 and on the downside, 16,400 can act as strong support.
Disclaimer: The views and recommendations made above are those of individual analysts and not of MintGenie.