The Indian equity benchmarks closed near a four-month high on August 8, on buying by foreign investors, falling crude oil prices and gains in auto as well as metal stocks.
At close, the Sensex was up 465.14 points, or 0.80 percent, at 58,853.07, and the Nifty was up 127.60 points, or 0.73 percent, at 17,525.10.
Amid mixed global cues, the Indian market started slow but extended gains as the day progressed and ended the session near the day’s high.
The market will remain shut on August 9 on account of Muharram.
“Sustained FII buying and falling oil prices are the major drivers for the ongoing market rally. Heavyweights played a significant role in today’s rise, while PSU banks remained under pressure following weak results of the PSB major,” said Vinod Nair, Head of Research, Geojit Financial Services.
“Western markets continued to gain after strong US job numbers allayed worries of a recession. The week ahead is busy in terms of economic data with the domestic investors gearing up for the release of the inflation numbers along with the manufacturing production data to gauge the strength of the economy,” he added.
M&M, Coal India, Bajaj Finserv, Hindalco Industries and HDFC Bank were among the major Nifty gainers. The losers included BPCL, SBI, UltraTech Cement, Britannia Industries and Nestle India.
Among sectors, Nifty auto, energy and metal indices rose 1 percent each, while the Nifty Bank rose 0.8 percent.
Here are the factors that drove the market to a near four-month high:
Sustained buying by foreign institutional investors (FIIs) remained the key driver of the rally.
After a long time, FIIs remained net buyers for the whole week ended August 5, buying Rs 6,991.54 crore worth of equities. Domestic institutional investors (DIIs) turned net sellers, as they sold equities worth of Rs 1,765.59 crore.
The cooling of crude oil prices was another reason for the positive sentiment. Investors, however, are cautiously watching the rising risk of a recession in the US and Europe, with crude declining over demand outlook concerns.
The NYMEX crude prices were hovering around $88 a barrel to a six-month low.
The gains in Indian shares were also supported by strong European markets, with France’s CAC rising 1 percent and Germany’s DAX and the UK’s FTSE up 0.5 percent each.
Most Asian markets, too, ended on a positive note.
Stocks and sectors
On the BSE, auto, capital goods, metal and power indices gained 1-2 percent. Buying was also seen in bank, healthcare and FMCG names.
BSE midcap and smallcap indices ended marginally higher.
A long build-up was seen in Hindustan Copper, Hindustan Aeronautics and Siemens, while a short build-up was seen in Alkem Laboratories, HPCL and Max Financial Services
Among individual stocks, a volume spike of more than 300 percent was seen in Hindustan Copper, Hindustan Aeronautics and Amara Raja Batteries.
More than 100 stocks, including TVS Motor Company, Siemens, M&M and Rama Steel Tubes, touched their 52-week highs on the BSE.
Outlook for August 10
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities
Despite a small blip in early trades, the bulls quickly rejuvenated and maintained their stranglehold even as other Asian peers ended mixed.
FIIs, which were missing in the action over the past few months, have once again started taking exposure to local equities, thus providing a major impetus to the markets.
Technically, after a muted opening, the market successfully cleared the short-term resistance of 17,500, which was broadly positive.
A bullish candle on daily charts and intraday breakout formation indicates a further uptrend from the current levels.
For the Nifty, the key support is 17,400 above which the breakout formation is likely to continue till 17,650-17,700. On the other hand, below 17,400 the index could slip to 17,325-17,300.
Rupak De, Senior Technical Analyst, LKP Securities
The Nifty moved above its recent consolidation as the bullish momentum continues. The index closed above the previous congestion levels on the daily chart, which suggests rising strength.
The trend is likely to remain bullish over the short term as long as it remains above the 200-day moving average, which is placed at 17,000. On the higher end, the index may move towards 17,750-17,800.
Gaurav Ratnaparkhi, Head, Technical Research, Sharekhan by BNP Paribas
For the last couple of sessions, the Nifty was hovering around the 78.6 percent retracement of the April–June decline, which is near 17,500.
On August 8, the Nifty has crossed that key Fibonacci level on a closing basis. This shows that the index is extending its up move further.
It is heading towards a falling trendline drawn from the previous crucial swing highs. Thus 17,750-17,800 will be the short-term target area on the upside. On the flip side, the near term support zone also shifts north and stands at 17,360-17,300
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