Stock market powers through challenges, Nifty gains 5.5 per cent

Mumbai (Maharashtra) [India], December 11 (ANI): The stock market maintained positive momentum, overcoming brief dips to ultimately close in green territory.

The global and domestic markets rebounded impressively during the month, driven by a cheerful festive season and positive global cues.

Investor sentiments were buoyed by a dovish Fed commentary and robust economic data, signalling a potential pause in further rate hikes by the US Federal Reserve.

Of the Nifty companies, 28 recorded advances while 22 witnessed declines, reflecting the overall positive sentiment in the market.

Top gainers among Nifty companies at the market closing included Ultra Cement, UPL, Adani Enterprises, Nestle India, and Power Grid. Conversely, Dr Reddy, Axis Bank, Cipla, Eicher Motors, and M&M were the top losers.

A broad-based rally characterized the month of November, with Nifty gaining 5.5 per cent, closing at 20,133 levels. Notably, Nifty Midcap 100 and Nifty Small Cap 100 indices outperformed, registering gains of 10.4 per cent and 12 per cent, respectively.

Domestic Institutional Investors (DIIs) recorded strong inflows for the fourth consecutive month, totalling Rs 12,762 crore. Foreign Institutional Investors (FIIs) turned net buyers, contributing Rs 5,795 crore after three consecutive months of selling.

India’s macro and policy momentum stood out among major economies, with GDP and corporate earnings experiencing the highest growth. Q2 GDP growth surpassed expectations, reaching 7.6 per cent, while GST collections crossed the Rs 1.7 trillion mark in November.

Varun Aggarwal, founder and managing director, Profit Idea, said, “Nifty index started the November month on a flattish note but bulls were seen in complete action right from the start and support gradually shifted higher. The index reclaimed near its all-time high zones and touched a high of 20158 zones. The index moved by 1185 points in the month and was driven by momentum in the northward direction. On the sectoral front, we have witnessed buying interest in most of the sectors mainly Realty, Auto, Banks, Metal, Pharma, IT and Energy sector”.

Aggarwal added, “Technically, the index witnessed buying on any small declines and wiped off the entire losses of the previous series. It formed a Bullish candle on a monthly scale and respected its previous month’s support zones. It formed a Bullish candle on the weekly scale and has been making higher lows for the last five weeks. The overall chart structure indicates that the index is likely to continue the up move and drive the index to a new price territory. Now Nifty has to hold above 20291 zones, for an up move towards 21000 then 21234-21410 whereas supports are placed at 20291 then 20086 zones”.

With the government’s focus on long-term capital expenditure across key sectors, expectations are high for the Banking, Financial Services and Insurance (BFSI), Industrials, Real Estate, Auto, and Consumer Discretionary sectors to perform well in the future.

Nifty index started November on a flattish note but quickly gained momentum. Bulls were active throughout the month, pushing the index to near its all-time high levels of 20,158. The index witnessed a substantial upward movement of 1,185 points.

Sector-wise, buying interest was observed in Realty, Auto, Banks, Metal, Pharma, IT, and Energy sectors The overall chart structure suggests the index is likely to continue the upward trend, targeting a new price territory.

The current support levels are at 20,291 and 20,086 zones, while the index is expected to face resistance around 21,000 before potentially hitting levels of 21,234-21,410 in the medium term.

Aggarwal said, “India VIX fell below 12-13 zones with the rise in Nifty Put Call Ratio which suggests overall bullish stance with buy on dips stance. Maximum Call OI is at 21000 then 21500 strike which is likely to act as a resistance at higher zones. US central bank action and comments from its policymakers continue to be in focus, this year we have seen four 25bps rate hikes and three status quo, with the last meeting being a turning point for market participants to discount ease off in the monetary policy stance”.

“Governor Powell and other Fed officials have tried to hold back the market mentioning that inflation concerns still exist and they have not yet completely ruled out a rate hike scenario. However, market sentiments are completely different as the CME Fed watch tool suggests that investors are discounting a pause in Dec meeting and a rate cut in early 2024, boosting safe-haven appeal for Gold and Silver prices”, said Aggarwal.

India’s VIX fell below 12-13 zones, indicating an overall bullish stance with a “buy on dips” approach. However, investors are urged to exercise caution as the US central bank’s actions and comments from policymakers continue to be closely monitored.

Despite the bullish momentum, a correction is anticipated, as daily RSI is overbought. Investors and traders are advised to implement trailing stop loss or hedge portfolios with bearish risk-defined strategies.

Petrochemical, IT, FMCG, Media, Metals, and Banking sectors are expected to perform well, offering potential investment opportunities. Despite the overall market rally, some small and mid-cap stocks remain discounted.

Investors are encouraged to stay invested in this favourable market environment, considering India’s status as a hotspot for investment. The larger time frame indicates a bullish outlook for Nifty, and caution is advised against being swayed solely by the index value.

Medium-term expectations suggest a potential resistance around 21,000, with a retracement possible. Ultra-short-term support is identified at 20,677.

Investors should remain vigilant and consider trailing stop losses or hedging strategies amid potential corrections in the bullish trend.