Domestic equities logged healthy gains on July 28, mirroring positive global sentiment, after the US Fed raised rates on an expected line by 75 bps and sounded less hawkish which eased the bond market and capped the gains of the dollar.
The US Federal Reserve hiked rates by 75 basis points to the 2.25%-2.50% range on July 27 which was the second consecutive rate hike by the Fed, aimed at bringing inflation down which is at a multi-year high level.
Sensex opened at 56,267.55 against the previous close of 55,816.32 and leapt almost 1,100 points to touch the intraday high of 55,816.32.
The index finally closed 1,041 points, or 1.87%, higher at 56,857.79 with 25 stocks in the green and five stocks in the red. Nifty50 ended 288 points, or 1.73%, higher at 16,929.60.
"Positive cues from global markets following the Fed policy outcome, as well as domestic large caps’ upbeat earnings, drove the market rally. The Fed's decision was as expected, while their positive comment dismissing the possibility of a recession and hinting at a slower pace of rate hikes in the coming months boosted global sentiments," said Vinod Nair, Head of Research at Geojit Financial Services.
Shares of Bajaj Finance (up 10.68%), Bajaj Finserv (up 10.14%), Tata Steel (up 4.59%), Kotak Mahindra Bank (up 4.25%) and IndusInd Bank (up 3.90%) ended as the top gainers in the Sensex index.
On the flip side, shares of Bharti Airtel (down 1.19%), UltraTech Cement (down 0.99%), Dr Reddy's Labs (down 0.73%), ITC (down 0.16%) and Sun Pharma (down 0.12%) ended in the red in the Sensex index.
Mid and smallcaps underperformed as the BSE Midcap index closed with a gain of 0.94% while the smallcap index ended 0.65% higher. Among the sectoral indices, IT, finance, realty, metal and banking indices rose almost 2% each.
“US Fed hiked the policy rates by 75bps which was on expected lines and largely factored in by the market. Moreover, the tone of the Fed’s chairman was less hawkish compared to the previous statement which receded some fears and uplifted the sentiments," Siddhartha Khemka, Head-Retail Research, Motilal Oswal Financial Services, observed.
As many as 110 stocks, including ITC, PVR, Inox Leisure, Hindustan Aeronautics, Coromandel International and Blue Dart Express, hit their fresh 52-week highs on BSE.
The overall market capitalisation of BSE-listed firms rose to ₹263.11 lakh crore from ₹259.72 lakh crore on July 27, making investors richer by ₹3.39 lakh crore in a single day.
"Indian benchmark indices outperformed their Asian peers on the last day of the current month's expiry as there was no surprise in the rate hike decision by the US Federal Reserve which came on expected lines, fuelling a rally in the US markets. The upbeat mood also had a rub-off effect on the domestic market, leading to buying in banking, IT, metals and realty stocks. Investors feel that RBI too may not spring any major surprise in the next week's monetary policy meeting, on hopes inflation will see a downward curve going ahead," Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, pointed out.
On the technical front, the Nifty formed a long bullish candle on daily charts which is largely positive. Chouhan said the short-term trend is looking positive but due to temporary overbought situations we could see some profit booking at higher levels.
"For traders, the 200-day SMA (simple moving average) of 17,025 and 17,100 would act as immediate resistance levels. On the flip side, 16,800-16,750 could be key support levels, said Chouhan.
Crude oil prices gained as Brent Crude traded above the $105 a barrel mark while the rupee rose 15 paise to close at 79.76 per dollar.
Disclaimer: The views and recommendations made above are those of the analysts and not of MintGenie.
