NEW DELHI: In an action-packed start to the week, domestic shares rose sharply on Monday as a busy week of earnings began. Investor wealth as suggested by the BSE market capitalisation rose over Rs 3 lakh crore in Monday’s trade, with two out of every three stocks trading higher amid strong global cues.
Data showed the BSE m-cap rose Rs 3.42 lakh crore to Rs 255.37 lakh crore compared with Rs 251.95 lakh crore as on Friday.
The 30-share pack Sensex rose over 760 points comfortably above the 54,000 mark. NSE NIfty50 advanced 229 points to settle above the 16,200 level, led by gains in financial and IT counters. Both benchmarks have managed to scale one-month peaks while rupee yet again settled at an all-time low.
During the afternoon session, markets further strengthened as buying in IT, Teck and Capital Goods stocks was seen. Gains in frontline blue chip stocks such as Infosys, Tech Mahindra also helped to lift the markets, said Narendra Solanki, Head Fundamental Research -Anand Rathi-Investment Services.
Sentiments were upbeat as a private report suggests that the income of farmers has grown in the range of 1.3-1.7 times in FY22 from the FY18 levels on average while grain exports soared to over $50 billion, he added.
23 stocks from the 30-share pack settled in the black, with IndusInd Bank and Infosys rising over 4 per cent while Tech Mahindra, Bajaj Finserv, Axis Bank, Kotak Mahindra, UltraTech Cement rising over 2-3 per cent. DRL, HDFC Bank, Maruti, M&M and Nestle settled with cuts in a strong session.
Nifty IT was the best performing sector of the day, rising 3 per cent. All sectoral indices barring Nifty Pharma and FMCG, settled with gains.
Broader markets also advanced to settle with healthy gains, with midcap and smallcap rising 1.40 per cent and 1.59 per cent.
Here are a few reasons that led to Monday’s rise:
1) US relief rally
A July survey from the University of Michigan showed that inflation expectations held steady or improved, along with general consumer sentiment, Reuters reported. That was welcome news after reports that showed consumer prices remained extremely hot in June, along with wholesale prices for businesses, the report added.
On Friday, the S&P500 climbed 1.9 per cent to 3,863.16, snapping a five-day losing streak. The Dow Jones Industrial Average advanced 2.1 per cent to 31,288.26 while the Nasdaq gained 1.8 per cent to 11,452.42.
2) Asian markets catches up
Asian markets caught up to the US cues and jumped up to 2.5 per cent in Monday’s trade. Hong Kong’s Hang Seng index surged 2.45 per cent to 20,792 while the Shanghai Composite index climbed 1.55 per cent to 3,278.10. In Seoul, the Kospi jumped 1.9 per cent to 2,375.25. If at all, a lack of surprises in the earnings season so far at home led the underperformance of the domestic market vis-a-vis peers.
3) FIIs buy shares worth Rs 1,649 cr
Investors probably took a sign of relief amid provisional data showing foreign portfolio investors (FPIs) were buyers of domestic stocks on Friday to the tune of Rs 1,649.36 crore. The pace of FPI selling has reduced of late, with July outflows at Rs 7,432 crore. This compares with an outflows of Rs 50,203 crore in June and Rs 39,993 crore in May.
4) Oil prices
The recent slide in oil prices have lifted investor sentiment, even as Brent oil prices rose a bit in Monday’s trade.
Brent and WTI posted their biggest weekly drops in about a month last week on fears of a recession that will hit oil demand. Mass Covid testing exercises continued in parts of China this week, raising oil demand concerns at the world’s second-largest oil consumer.
On Monday, however, Brent crude futures for September settlement rose $2.54, or 2.5 per cent, to $103.70 a barrel. US West Texas Intermediate (WTI) crude futures for August delivery were up $2.31, or 2.4 per cent, to $99.90 a barrel.
5) Technical set up
Nifty50 had last week formed an Inside Bar candle on the weekly chart that signalled a loss of momentum. The index had support at 15,850 level and resistance at 16,200 level. The 50-pack index has breached its resistance level in Monday’s intraday trade, but it was yet to be seen whether it may sustain the level.
By 1 pm, the NSE barometer was trading at 16,223.95, up 174.75 points or 1.09 per cent. It’s a sell on rise market, analysts had warned last week.