Domestic key equity indices the Sensex and the Nifty ended with healthy gains on September 5 despite weak global cues as investors picked stocks amid hopes that the domestic market will outperform a majority of its global peers and economic growth will not be disappointing even as the world's two largest economies, the US and China are grappling with faltering economic growth.
Sensex closed with a gain of 443 points, or 0.75%, at 59,245.98 while the Nifty settled at 17,665.80, up 126 points or 0.72%. The BSE Midcap index ended 0.46% higher while the Smallcap index rose 0.89%.
Indian markets have performed relatively better than their global market peers in 2022 till August, as per a report by Bank of Baroda (BoB).
Indian benchmark Nifty and UK index FTSE have vastly outperformed between January-August 2022. In this period, the Indian benchmark (Nifty) has advanced 2.3% while FTSE is up 2.8%, BoB pointed out.
During the same time, US indices S&P500 and Dow Jones have lost 10.7% and 7%, respectively. Among Asian peers, Hong Kong's Hang Seng has shed 15% whereas Japan's Nikkei is down half a percent, the BoB report said.
India's economic indicators show resilience and most analysts and economists believe that the country has no risk of a recession in the near future.
As reported by Mint, Union Finance Minister Nirmala Sitharaman on Saturday said India will see double-digit GDP growth in this financial year, adding that the nation is on a solid wicket when compared to others, and is responsive in terms of extending hand-holding to the required sections.
India is now the world’s sixth largest economy ahead of the UK and as per a report by the State Bank of India (SBI), the country will outstrip two other major economies by the end of this decade.
The SBI's Economic Research Department predicted that India would surpass Germany in 2027 and most likely Japan by 2029 at the current rate of growth and become the world's third-largest economy.
The domestic market may not completely decouple from the global trends but economic indicators are giving hope to investors that the long-term outlook for the market remains intact.
Shares of Sun Pharma, ITC, NTPC, Reliance Industries and Tata Steel ended as the top gainers in the Sensex index while Nestle, UltraTech Cement, Wipro and Power Grid ended as the top laggards.
Among the sectoral indices, BSE Metal rose 2.04% after two sessions of losses. Capital goods, telecom, basic materials, bank, finance and realty indices rose up to a percent.
More than 220 stocks, including ITC, Adani Enterprises, Ashok Leyland, Bank of Baroda, Federal Bank, IDFC and Indian Hotels Company, hit their 52-week highs on BSE.
Vinod Nair, Head of Research at Geojit Financial Services pointed out that the concerns about the global economy, which is struggling with high inflation and recession, were stoked by mixed job data from the US and a worsening energy situation in Europe.
Strong employment in the US will give Fed the confidence to raise interest rates by another 50–75 bps in the forthcoming policy meetings. In anticipation of a decrease in output, oil prices increased prior to the OPEC+ summit.
Meanwhile, none of these has impacted the domestic market, which continues to hold an upbeat outlook, bolstered by strengthening local economic statistics and rising corporate demand, Nair added.
Brent Crude traded near the $95 a barrel mark while the rupee fell 5 paise to close at 79.85 per dollar mark.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities observed that the benchmark indices outperformed their Asian peers and also shrugged off the weak European market sentiment as investors bet on metals, banking and capital goods stocks.
"Cautious optimism prevailed as there are enough indications that markets may remain volatile in coming sessions on global slowdown fears," he said.
The Nifty formed a bullish candle on daily charts. As per Chouhan, the market is witnessing positive consolidation formation near the 20-day SMA (simple moving average).
"The Nifty would see a key support level of 17,550 and above the same, it could move till 17,750-17,800. On the flip side, below 17,550, a fresh round of selling could be seen and below the same, the index could slip till 17,450-17,400," said Chouhan.
The Nifty remained in the green during the day; however, it stayed from challenging the 17,700 mark which remained a crucial resistance, said Rupak De, Senior Technical Analyst at LKP Securities.
"The market may remain a ‘buy on dips’ market as long as it sustains above 17,400. On the higher end, a decisive move above 17,700 may induce a rally in the market," he added.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.