Relief rally continues! Sensex climbs 560 points, Nifty closes above 22,300 led by PSU banks and consumer durables

The Indian equity indices on Monday closed higher extending Friday’s rally on indication that the situation in West Asia is easing. The Sensex advanced 560 points or 0.77% to close the day at 73,648.62. The Nifty 50 closed 190 points or 0.86% higher at 22,336.40. The gainers included Tata Consumer Products, BPCL, L&T, Eicher Motors, and Shriram Finance. The Indian Volatility Index (India VIX) closed 5.65% lower. 

Nifty Bank closed the session 351 points higher at 47,924.90. Similarly, the Nifty Midcap 100 lost almost 400 points or 0.82% to settle at 49,096.40. 

On the sectoral front, PSU bank and consumer durable stocks led the indices higher. In the broader indices, smallcap and midcap stocks closed in the green. 

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“The Indian market extended last Friday’s relief rally as Middle East tension saw some respite, though the situation remains fluid. The recovery was broad-based across sectors, with renewed interest in mid- and small-caps. Gold and oil prices showed some relief but are still at elevated levels. Hawkish remarks from the US FED, driven by persistent inflation and robust economic data, spurred a rally in bond yields. The prevailing higher interest rate environment is expected to persist longer than expected which, along with the moderating earnings growth, suggests a continuation of the consolidation in the near term,” said Vinod Nair, Head of Research at Geojit Financial Services.

“Bulls continued to dominate the market as the Nifty gained for the second consecutive session. The trend has turned positive after reclaiming a critical near-term moving average. The sentiment is expected to remain favourable for bulls as long as it stays above 22,150. On the upside, the index could potentially move towards 22,600-22,700. Conversely, a drop below 22,150 could lead to consolidation in the index,” said Rupak De, Senior Technical Analyst at LKP Securities.

“The BankNifty index exhibited continued bullish strength as it witnessed follow-up buying from lower levels. Currently, it is approaching a crucial resistance level around 48000, marked by the highest open interest on the call side. A decisive break above this level is anticipated to trigger further short-covering moves. Meanwhile, immediate support lies at 47600-47500 levels, suggesting that any dip towards this support zone could present a buying opportunity,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

“Markets strengthened recovery and gained nearly a per cent, in continuation to Friday’s rebound. Firm global cues triggered an upbeat start, followed by a range bound for most of the session. However, buying in select heavyweights in the final hour further boosted the gains.  Eventually, it settled around the day’s high at 22,336.40 level. All the key sectors contributed to the move wherein auto, banking and FMCG were among the top gainers. The broader indices also traded in sync with the move and gained in the range of 1%-1.4%,” said Ajit Mishra, Senior Vice President of Research at Religare Broking.

Participants are taking comfort from stability on the global front while earnings are offering mixed indications so far. On the index front, Nifty has reclaimed its short-term moving average i.e. 20 DEMA but sustainability is critical to inch towards the record high. “Amid all this, traders should continue with a hedged approach and stay focused on stock selection,” said Mishra.

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