Frontline indices the Sensex and the Nifty ended in the green for the fourth consecutive session on October 19. However, mixed global cues and the rupee's steep fall against the dollar capped the gains.
The rupee fell 66 paise to close at 83.02 per dollar on October 19.
“The US dollar held at a 32-year peak against the yen and rose from a two-week trough against a basket of major peers, underpinned by expectations of aggressive US Federal Reserve interest rate hikes,” reported Reuters.
Global markets were mixed as investors remained cautious about the prospects of aggressive rate hikes after British inflation returned to a 40-year high level of 10.1% in September. At the same time, upbeat earnings offered some hope to market participants.
The domestic market has been in the green since October 14 taking comfort from the early trends of the September quarter earnings which have not thrown any negative surprises so far.
“Domestic institutions have been strong buyers in the market over the last week, as Q2FY23 results have come in line or stronger than expected, thus far. Five out of six Nifty companies and 12 out of 20 BSE200 companies which have reported thus far have surprised positively," said S Hariharan, Head Institutional Equity Sales, Emkay Global Financial Services.
Sustained buying by domestic investors also has supported the market.
"FII selling is getting completely overwhelmed by DII buying. DIIs bought stocks for ₹5,290 crore in the cash market during the last three trading days against FII selling of ₹1,536 crore. This complete dominance of DIIs over FIIs is triggering short covering too," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services observed.
Sensex ended 147 points, or 0.25%, higher at 59,107.19 while the Nifty closed the day at 17,512.25, up 25 points, or 0.14%. Mid and smallcaps underperformed as the BSE Midcap index ended 0.13% higher while the Smallcap index ended 0.03% lower.
Nestle, HDFC, Reliance Industries, ITC and Axis Bank were the top gainer stocks in the Sensex index. On the flip side, NTPC, SBI, Bajaj Finserv, HCL Tech, Infosys and Dr Reddy's Labs ended as the top laggards in the benchmark index.
Among the sectoral indices, BSE Utilities and Power fell more than a percent each. Metal, IT and Teck indices fell almost a percent each.
Analysts believe that the market may not sustain the gains due to headwinds such as inflation, rate hikes and a global recession. The difference between the valuation of the Indian market and its emerging market peers may impact the flow of the foreign fund.
"While seasonality favours a strong month for global equity markets, we continue to believe that upsides for Indian markets may remain capped due to adverse valuation differential relative to emerging market peers and hence, muted foreign flows," said Hariharan.
Crude oil prices were volatile. Benchmark Brent Crude traded near the $90 barrel mark.
Technicals
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities observed that the Nifty formed a small bearish candle on daily charts even as the short-term texture of the market is still positive.
"We are of the view that 17,400 would be the sacrosanct support zone for the index. If the index trades above the same, it could move up to 17,600-17,700 in the near future. On the flip side, below 17,400, the uptrend would be vulnerable," said Chouhan.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.
