Post Market Analysis of Equity benchmark

Equity benchmark Sensex/Nifty both scaled up to  52-week highs amid smart rallies across the global markets after the US inflation data poised the hopes of the US Fed to tone down its aggressive rate hike stance going ahead. Buying in IT, metal, HDFC Twins, and financial stocks lifted the market by nearly 2%. A strong rupee against the US dollar, good quarterly results, and unabated foreign capital inflows further boosted sentiment. India Vix slipped over a 1-year low to close at 14.4%.

Sensex started the session above the 61,000 level and strengthened further to touch the day’s high at 61,841 – a level not seen since October 19 last year. The index finally closed the session higher by 1,181 points or 2 percent at 61,795 – marking its all-time closing high. Similarly, Nifty soared 321 points or 1.80 percent to end the day at 18,350 – its highest closing since October 19 last year. The nifty rally was driven by HDFC twin – HDFC and HDFC Bank which surged around 6 percent on the back expectation that its weightage would increase post-merger. IT shares – Infosys, Tech Mahindra, HCL Tech, and TCS – rose as much as 3-5% percent. Tata Steel and Reliance Industries were among the major gainers on Nifty stocks.

USDINR fell sharply by 100bps to close at a 2-month low of below 81 indicating aggressive FIIs buying interest. Moreover, strong macro data (October PMI reported a 6-month low), stable oil prices, and strong GST collection also added fuel to the market sentiment. Among the global market, overnight, the US market surged 3-7% (the biggest rally over 2-year) after a smaller-than-expected increase in the US consumer prices index fueled hopes that the US Federal Reserve could tone down its aggressive pace of interest rate hikes. The US Inflation for October has come in at 7.7% (expectation at 7.9%) against the previous month was at 8.2%.

Core Inflation fell to 6.3% while the expectation was 6.5%. A slowdown in US inflation could mean the Federal Reserve won’t have to be so aggressive about raising interest rates. The market expects the US Fed to raise rates again next month but by a smaller margin of a one-half percentage point after a series of 0.75 percentage-point increases. US 10-Year (3.80% from 4.2%) and 2-year bond yield declined by 10% on a single day while Dollar Index fell to a 3-month high. Asian markets, Japan, Hong Kong (up over 7%), South Korea, and Australia Index gained over 2-4% as lower US inflation dimmed expectations of more aggressive Federal Reserve rate hikes and China announced some easing of its strict Covid Zero measures.

IT stocks recorded a smart rally after global its major Index Nasdaq Composite climbed up by 7.5% in hope of improving global demand. Infosys surged by 5% to close at Rs1570. Coforge, lti, Tech Mahindra, TCS, and HCL Tech gained between 3-6%. Metal stocks surged on account of the US Dollar Index fell to a 3-month low at below 109. Jindal Steel surged 5% to close at Rs499 after announcing strong Q2 results. Hindalco, Nalco, Tata Steel, Vedanta, and JSW Steel gained between 2-4%

Technical Outlook:

The nifty index opened the gap up by 244 points and kept moving higher throughout the day. Buying interest was seen at all levels and it drove the index to its 52 weeks high levels. It touched a fresh 52-week high of 18362 and closed near its day’s high with gains of around 320 points. It formed a Bullish candle on the daily and weekly frame and has been forming higher lows for the last six weeks. Now, it has to hold above 18300 zones, for an up move towards 18500 then 18600 zones whereas supports are placed at 18188 and 18088 zones.