NEW DELHI: Bulls were back in action in the afternoon of Thursday as they recovered from initial volatility and sent benchmark indices higher. Even though risks over interest rate hike remains, traders chose to buy stocks at low levels.
Recovery came on the back of buying inReliance Industries shares which was over 5 per cent. Buying in IT and pharma also helped the indices. However, banks were still trading lower.
“The recent correction was overdue and should be construed as healthy in the overall larger uptrend. Historically, markets have seen corrections of 10-15 per cent almost every year. It is difficult and actually a futile exercise to predict whether the market will correct further or will recover from current levels itself. In general, a 5 per cent correction is a good enough “dip” to follow the time and tested “buy on dips” allocation strategy,” said analysts at ICICIDirect Research.
How are bluechips doing
After opening in the green, benchmark rose higher. At 12.36 pm, BSE flagship Sensex was up 382 points or 0.65 per cent to 58,723. The index recovered nearly 600 points from lows. NSE benchmark Nifty gained to 17,508, down 93 points or 0.54 per cent.
“On the technical front, the key resistance levels for Nifty50 are 17,560 followed by 17,700 and on the downside 17,310 followed by 17,210 can act as strong support. Key resistance and support for Bank Nifty are 37,800 and 37,150, respectively,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty, UPL, Reliance Industries, Tech Mahindra, Infosys, Kotak Mahindra Bank, Divi’s Labs and Adani Ports were among gainers.
ICICI Bank was the top loser in the pack, down 1.64 per cent. NTPC, Eicher Motors, Coal India, Shree Cement, Indian Oil, Power Grid, Cipla, HDFC and IndusInd Bank were among those that traded in the red.
FACTORS DRIVING MARKETS
Unemployment at 52-yr low: The number of Americans filing new claims for unemployment benefits fell to their lowest level since 1969 last week, suggesting economic activity was accelerating. A separate report from the US Commerce Department on Wednesday showed gross domestic product rose at a 2.1 per cent rate in the third quarter.
Fed indicates quick rate hikes: A growing number of Fed policymakers indicated they would be open to speeding up the elimination of their bond-buying program if high inflation held and move more quickly to raise interest rates, minutes of the US central bank’s last policy meeting showed.
Dollar on a high: The dollar index edged 0.1 per cent lower off its highest in 16 months hit on Wednesday. A drop in dollar generally means inflows to India.
Broader market indices were trading lower, underperforming their headline peers in morning trade. Nifty Smallcap was down 0.38 per cent while Nifty Midcap declined 0.32 per cent. The broadest index on NSE, Nifty 500 was down 0.22 per cent.
Godrej Properties, Ipca Labs, Prestige Estates, Trident, Sterlite Tech and Rossari Biotech were gainers from the space while Sequent Scientific, Firstsource Solution, JB Chemical, IRCTC, Indian Bank and JSW Energy were under selling pressure.
Asian tech stocks rose, following their U.S.-listed peers, though broader gains were capped by the strength of the US dollar as investors bet on interest rates rising more quickly in the United States than other major economies.
European stocks were expected to advance with Euro Stoxx 50 futures up 0.5 per cent and FTSE futures 0.24 per cent higher in early trade, potentially indicating a rebound after a week when rising COVID cases in Europe have weighed on market sentiment there.
Japan’s Nikkei rose 0.8 per cent, helped by gains in tech stocks such as Sony, which rose 1.5 per cent, while Hong Kong’s bruised tech index snapped six sessions of losses to gain 0.85 per cent, versus a 0.25 per cent gain in the local benchmark.