MUMBAI: Stocks of software exporters and banking & financial services companies led the gainers on Tuesday as the sensex rallied 1,128 points or 2.3% to close above the 50k mark again at 50,137 points. Smooth vaccine rollout in the US that led to new highs for some of the leading indices on Wall Street on Monday, despite rising infection numbers in India, led to strong buying on Dalal Street.
The day’s four-digit gain was the biggest single-session surge for the sensex in over two months. The rally was also helped by short covering by speculators who rushed to cut their losses after the initial gains in the index. On the NSE, the Nifty closed 338 points or 2.3% higher at 14,845 points.
Analysts feel the trend for domestic markets could be upwards in the medium term. According to Rusmik Oza of Kotak Securities, two factors could act in India’s favour and help domestic equities outperform its peers in the emerging markets. Except for Tuesday’s depreciation, the rupee has remained quite steady even though the dollar index has risen. Also when the US 10-year bond yield has spiked sharply, India’s 10-year bond yield has remained quite stable.
“The recent correction could be due to rising Covid cases and year-end phenomenon wherein retail and HNI (high networth individual) investors would have avoided taking any fresh positions. The start of new settlement for fiscal year 2022 and the forthcoming earnings seasons could be the reasons for fresh investor interest in stocks,” Oza said.
In the short term, in addition to the domestic factors, market players are keeping a close watch on global factors like US President Joe Biden’s tax plans, the rising US 10-year yield and the vaccine rollout in the world’s biggest economy.
Technically too, the indices have some hurdles to cross. According to Abhishek Chinchalkar, head of education, Fyers Securities, for the Nifty last week’s high of 14,878 is the immediate hurdle. “If the index surpasses this level, the recovery could extend towards 14,985-15,060 points. Meanwhile, (Tuesday’s) low of 14,617 now becomes the immediate support to watch out for, a break below which is likely to resume the downside pressure on the index,” Chinchalkar, a technical analyst, said in a post-market note.
In Tuesday’s session, of the 30 sensex stocks, 27 closed with gains. In the broader market, however, the advance-decline ratio was more moderated. There were 1,518 stocks that closed higher compared to 1,433 scrips which closed lower. As a result, investors were richer by Rs 3.5 lakh crore with BSE’s market capitalisation now at Rs 206.7 lakh crore.