Indian equity benchmarks the Sensex and the Nifty ended in the green for the third consecutive session on July 8 as investors continued buying stocks at cheaper valuations while a fall in crude oil prices underpinned sentiment.
Global cues also remained broadly positive but the shooting of Japan's former prime minister Shinzo Abe caused some volatility in Asian stocks.
Sensex closed 303 points, or 0.56 percent, higher at 54,481.84 while the Nifty settled at 16,220.60, with a gain of 88 points or 0.54 percent.
Shares of Larsen & Toubro, Power Grid, NTPC, ICICI Bank and Axis Bank ended as the top gainers in the Sensex index, rising between 2-5 percent while shares of Tata Steel, IndusInd Bank, Maruti Suzuki, TCS and Wipro ended as the top laggards, falling between 0.4-2 percent.
BSE Midcap ended 0.20 percent up while the smallcap index closed with a gain of 0.28 percent.
BSE Capital Goods closed 2.23 percent higher, ending as the top gainer among the sectoral indices, followed by BSE Power (up 1.71 percent), Utilities (up 1.58 percent) and Industrials (up 1.51 percent).
"The Indian rally got stronger as crude prices corrected halving FIIs selling when compared to last week. However, this rally can fizzle out as correction in commodities prices and tightening monetary policy are negative for the global economy, limiting earnings growth and valuation expansion. Q1 earnings season will be the prime focus of the market, in the near-term," said Vinod Nair, Head of Research at Geojit Financial Services.
Crude oil benchmark Brent Crude traded near the $105 a barrel mark while the rupee fell 8 paise to end at 79.25 per dollar.
For the week, both Sensex and the Nifty gained 3 percent each. BSE Midcap rose 3.64 percent while the smallcap index rose 3.36 percent.
The overall market capitalisation of BSE-listed firms rose to ₹251.6 lakh crore from ₹243.9 lakh crore on July 1, making investors richer by ₹7.7 lakh crore in a week.
Analysts say the market may not be able to sustain the rally as the headwinds in terms of inflation, rate hikes and fears of a recession persist.
"While the stock market has gone up this week, historical data does not support a full-fledged revival in the second half of this year. There have been 11 occasions in the past 30 years where the markets have earned a negative return for the first half of the year and only in two out of those 11 have the markets recovered during the second half to close the year with decent returns," Rahul Shah, - Co-Head of Research, Equitymaster, said.
"History is definitely not in favour of the markets recovering in the second half. Even at the macro level, there are still a lot of headwinds like inflation, and crude and geopolitical events that may nip any recovery in the bud. Having said that, it may not be a bad idea to have a staggered buying approach for fundamentally strong stocks that have corrected significantly over the last few months," Shah added.
Analysts are of the view that the positive trend in the market may continue as long as the Nifty remains above the 16,000 mark.
As per Rupak De, Senior Technical Analyst at LKP Securities, the Nifty remained above the 50-day exponential moving average (EMA) throughout the session suggesting a prevailing positive trend.
"A higher top higher bottom of a smaller degree is visible on the daily chart. The daily RSI is in positive crossover and rising. The trend is likely to remain positive as long as it sustains above 16,000. On the higher end, 16,300 may act as immediate resistance," said De.
Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in observed that on the daily charts, Nifty50 registered an indecisive candle which resembles a 'hanging man' but the lower shadow should have been slightly longer to qualify as a perfect hanging man pattern.
"Throughout the session, the index remained largely inside a 50-point range of 16,230 and 16,180 which can be a cause for concern. As the index closed above its critical hurdle of 16,172, bulls can aim at its 200-day EMA whose value is placed around 16,550," said Mohammad.
"It is critical for the index to sustain above 16,157 as a close below that level can induce some weakness with an initial target placed in the zone of 16045 - 16011. Therefore, short-term traders are advised to consider fresh buying only above 16,275 and look for a target of 16,500," Mohammad said.
Disclaimer: The views and recommendations made above are those of individual analysts not of MintGenie.