Domestic equities clocked healthy gains on August 11 amid mixed global cues as sentiment got a boost after the US July inflation data hinted inflation might have peaked last month which may result in a moderation in the pace of rate hikes by the US Fed.
Sensex closed 515 points, or 0.88%, higher at 59,332.60 with 19 stocks in the green and 11 stocks in the red. Nifty closed with a gain of 124 points, or 0.71%, at 17,659.
Shares of Axis Bank, Bajaj Finance, HDFC, Tech Mahindra, TCS and SBI ended as the top gainers while those of ITC, NTPC, Hindustan Unilever, Bharti Airtel and Maruti ended as the top laggards in the Sensex index.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities pointed out that investors cheered the US inflation data for July, which came in below the estimate and raised hopes that the Federal Reserve may not be that aggressive in hiking interest rates in its next meeting. Traders have also been drawing comfort from the falling crude oil prices and FII inflows into the local shares in the last few sessions.
Mid and smallcaps remained in line with the benchmark; the BSE Midcap index rose 0.83% while the smallcap index rose 0.52%.
Among the sectoral indices, IT, finance, banking, finance, consumer durables and realty indices rose more than a percent each.
"As softer than expected US inflation data suggested a slower pace of rate hike, the global market encouraged optimism. US CPI inflation smoothened to 8.5% in July as lower energy prices offset the increase in food and shelter cost. Domestic investors await the release of India’s inflation data due today, which is expected to show a decline in inflation trend on a month-on-month basis," said Vinod Nair, Head of Research at Geojit Financial Services.
Chouhan pointed out that the Nifty is trading near its important resistance level and has also formed a small bearish candle. For traders, 17,600 would be the key level to watch out for, while the overall chart structure suggests that if the market sustains above the same then breakout continuation formation could continue till 17,700-17,750. On the flip side, a sharp intraday correction is possible if the index trades below 17,600. Below which, the index could slip till 17,540-17,450, said Chouhan.
Rupak De, Senior Technical Analyst at LKP Securities pointed out that the Nifty continued to remain above the consolidation on the daily chart, suggesting a continuation of the up trend in the market.
"On the higher end, however, Nifty had faced a bit of selling pressure that led to a close around the day's low. The current rally may extend towards 17,750-17,800, where crucial trendline resistance is placed. On the lower end, support is there at 17,450-17,500," said De.
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