News

Published: May 18, 2024
Updated: May 18, 2024

D-Street Rebounds Sharply Amid Rate Cut Hopes and Positive Global Cues

Significant Gains in Equity Markets:

The Indian equity markets saw a strong rebound last week, driven by rising hopes for a domestic rate cut and positive global cues. The BSE Sensex surged by 1,341 points, or 1.85%, to reach 74,006 points for the week ending May 18. Meanwhile, the Nifty gained 447 points, or 2.03%, closing at 22,502.

Sectoral Performances and Top Gainers:

Sector-wise, the BSE Capital Goods index was the standout performer, surging by 10%. It was followed by the BSE Realty index, which gained 7.6%, and the BSE Power index, which rose by 7%. Additionally, the BSE Metal index and the BSE Oil & Gas index saw gains of 5.8% and 4%, respectively.

Among the Nifty 50 stocks, 42 delivered positive returns. Mahindra & Mahindra emerged as the top gainer with a 14.2% increase, buoyed by strong Q4 results. Other notable performers included Larsen & Toubro, Adani Ports, and Hindalco Industries, with gains of 5.9%, 5.7%, and 5.5%, respectively. Cipla, Hero MotoCorp, and Coal India also advanced by over 4%.

Market Movers and Decliners:

Despite the overall positive trend, some stocks did not perform as well. Tata Motors saw a decline of 9%, while Bajaj Auto and Dr. Reddy's Labs dropped by 1.9% and 1.7%, respectively.

Foreign Portfolio Investor Trends:

Foreign portfolio investors (FPIs) exhibited cautious behaviour due to ongoing uncertainties, particularly around the Lok Sabha elections. High market valuations also contributed to their profit-taking. Experts anticipate that the market will remain volatile post-election results, with significant attention shifting to the July budget announcement.

Positive Domestic and Global Economic Indicators:

The domestic market's recovery has been supported by better-than-expected earnings from key sectors and positive signals from global markets. Mid- and small-cap stocks outperformed the broader index, despite concerns over high valuations. Lower-than-expected consumer inflation data from both India and the US has bolstered investor confidence, raising hopes for potential interest rate cuts.

Upcoming Economic Data and Market Outlook:

Market participants are eagerly awaiting the release of PMI data for May from both the US and India next week, which will provide further insights. Despite the ongoing uncertainties surrounding election results and quarterly earnings, the broader market sentiment remains optimistic.

Nifty Technical Analysis:

The Nifty closed above 22,500 for the first time in several days, although a small-bodied candle on the daily chart suggests uncertainty about the future direction. Heavy options activity at the 22,500 strike indicates a potential inflection point. Traders should be vigilant in the initial trading hours to confirm any directional move. Support is seen at 22,400, with potential resistance and upward targets around 22,600.

Positive Long-Term Outlook Amid Short-Term Volatility:

Despite short-term uncertainties and potential market volatility, the long-term outlook for the Indian equity market remains positive. Investors are optimistic about strong returns over the next three to five years, driven by favourable economic conditions and strategic market developments.