Snapping their losing run of the last two consecutive sessions, equity benchmarks the Sensex and the Nifty closed with healthy gains on December 19 amid mixed global cues even as investors keep in mind the impact of rate hikes on the worldwide economy.
The US Federal Reserve and European Central Bank hiked rates last week and signalled more hikes were coming as long as inflation remains high. Hawkish central banks upset the market which was expecting the pace of rate hikes to slow down in the near future.
After the drubbings, investors appear to have picked stocks at lower prices as the long-term outlook of the Indian market remains bright thanks to the country's domestic-centric economy which is expected to experience little pressure from a recession in the West.
Key highlights of the day
Sensex opened 68 points higher at 61,405.80 against the previous close of 61,337.81 and jumped 507 points higher to 61,844.92 in intraday trade.
The index closed 468 points, or 0.76 percent, higher at 61,806.19 while the Nifty closed at 18,420.45, up 151 points, or 0.83 percent.
The BSE Midcap and Smallcap indices closed 0.67 percent and 0.29 percent higher, respectively.
The overall market capitalisation of BSE-listed firms jumped to ₹288 lakh crore from ₹285.5 lakh crore in the previous session, making investors richer by ₹2.5 lakh crore in a single day.
As many as 151 stocks, including Adani Enterprises, V-Guard Industries, Suzlon Energy, Mahindra CIE Automotive, Engineers India, Britannia Industries and APAR Industries, hit their 52-weke highs in intraday tarde on BSE.
Crude oil prices rebounded on optimism over the Chinese economy after media reports suggested that Beijing may take steps to support its economy in 2023. Brent Crude rose over a percent and traded near the $80 per barrel mark.
The rupee rose 17 paise to end at 82.70 per dollar after the greenback eased a bit.
Top Sensex gainers and losers
Shares of Mahindra and Mahindra, Power Grid, Bharti Airtel, Bajaj Finserv and Hindustan Unilever ended as the top gainers in the Sensex index.
On the flip side, six stocks- TCS, Infosys, Tata Motors, Sun Pharma, IndusInd Bank and Wipro - ended as the laggards in the 30-share pack Sensex.
Barring Nifty IT (down 0.51 percent) and the PSU Bank index (down 0.12 percent), all sectoral indices ended with gains.
IT stocks suffered losses after global IT services firm Accenture reported lower deal bookings while revealing its Q1FY23 numbers, reinforcing the concerns over an economic slowdown in the US and Europe and their impact on the IT sector.
Nifty Auto, FMCG and Metal indices rose over a percent each.
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities attributed the gains to short covering and said that selective buying will continue in this market.
"Optimism in European markets and short covering helped local benchmarks stage a smart bounce back even as other Asian market peers languished in negative territory. Despite the recovery, investors are lacking confidence after the recent US Federal Reserve indicated more rate hikes in the coming year. While markets may stay volatile in the coming sessions, selective buying will continue to be the mantra of investors till the worries of interest rates subside," said Chouhan.
Ajit Mishra, VP of Technical Research at Religare Broking underscored that we have been seeing this trend of select heavyweights coming to rescue the index during the corrective phase. It was not different this time.
"A decisive close above 18,500 could further fuel the rebound else profit taking may resume. We recommend staying selective and preferring the top performers from the participating sectors. Besides, keep a check on overnight leveraged trades as volatility may continue," said Mishra.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas pointed out that after a minor degree dip in the last week, the Nifty reached the junction of the 40 DEMA and the daily lower Bollinger Band. These two parameters together form a key support zone and the same is being witnessed this time as well.
"The channel study shows that the index touched the lower end of the downward-sloping channel that encompasses the recent decline from 18,887. From these multiple technical parameters, the Nifty leaped on December 19. Going ahead, the Nifty is expected to test the upper channel line near 18,600. On the downside, 18,250-18,200 will act as a key short-term support zone," said Ratnaparkhi.
Chouhan underscored that the Nifty found support near 18,250 and reversed sharply thereafter. However, the short-term formation is still on the negative side.
"As long as the index holds 18,300, a pullback rally could be seen and above the same, the index could move up to 18,550-18,575 levels or 20-day SMA. On the flip side, below 18,300, any uptrend would be vulnerable; below the same, the index could slip to 18,200-18,150," 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.