Yesterday, better-than-expected CPI inflation data fuelled a favorable rally in Indian markets with IT stocks finally halting their 7-day losing streak and PSU banks extending their gains furthermore. Sensex stayed above the 62,500 mark and Nifty 50 held over 18,600 -- indicating the beginning of improvement from the past few days' selloffs.
Sensex surged by 402.73 points or 0.65% to close at 62,533.30. Meanwhile, Nifty 50 settled at 18,608 higher by 110.85 points or 0.6% on Tuesday. After seven consecutive days of downfall, IT indexes on both BSE and NSE have climbed by over 1.1% each. Nifty PSU Bank climbed over 3.8%, while private banks, financials, auto, and capital goods stocks also recorded notable upside. Overall, Bank Nifty gained nearly 238 points. Furthermore, at the interbank forex market, the Indian rupee dropped to end at 82.8050 against the US currency compared to the previous day's closing of 82.53.
Top bulls were IndusInd Bank, Bajaj Finance, Infosys, HCL Tech, M&M, TCS, Tech Mahindra, Bajaj Finserve, and Ultratech Cement were top gainers.
US inflation data which came late yesterday stood at around 7.1% -- far lower than the consensus estimate of 7.3%. This brings a sign of relief among investors as they gauge a 50 bps hike from Fed in the upcoming policy --- which would be lower compared to three consecutive 75 bps rate hikes in the past policies.
In the early deals on Wednesday, broader counterparts in Asia such as Hong Kong, Japan, South Korea, and Australia shares witnessed an upside, alongside US equity futures. However, mainland China stocks were on a volatile note. On this day, among the most-awaited key factor would be US Fed's stance on inflation going forward, economic outlook, and their rate outcomes. The majority are expecting a rise in Asian stocks after easing the US inflation print.
Meanwhile, Sensex and Nifty 50 have already reacted positively after India's consumer price index (CPI) inflation eased to an 11-month low at 5.88% in November -- which is for the first time below RBI's upper tolerance limit since December last year. US inflation data and expectations of a smaller size rate hike from the Fed are likely to sway sentiments today.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "The lower-than-expected November CPI inflation in the US which came at 7.1 % YoY and only 0.1% MoM confirms the market expectation that the Fed will hike rate by only 50bp today. The consensus terminal Fed fund rate is now slightly below 5%, which is market positive."
However, Vijayakumar added that since the recession in the US in 2023 is a high-probability event, the market is unlikely to surge. In India, the bank index, and within the bank index the PSU bank segment, is the strongest segment and this can continue to remain resilient. HDFC twins exhibit strength. The recovery in the IT segment has some more steam to go. The resumption of FII buying is another positive.
For Wednesday, Geojit strategist stated that Nifty is unlikely to break out of the 18,400-18,800 range and sustain at higher levels. He added, "high valuations are likely to cap the rally."
Meanwhile, Mitul Shah, Head of Research – Institutional Desk of Reliance Securities said, "The markets are likely to see a gap up opening; SGX Nifty is up 203 points compared to previous spot Nifty closing. Asian Markets are trading in green; Nikkei is up 0.7% while Heng Seng is up 0.1%."
Derivates market:
Shilpa Rout – Derivatives Lead Analyst, Prabhudas Lilladher said, "NIFTY weekly expiry option chain witnesses PE writers adding their positions at 18500PE followed by 18600PE- over 80 lakha ams 77 lakh OI shares respectively. CE writers maximum exposures lies at 19000 - nearly a crore shares overall, with CE unwinding alos seen across many immediate strikes. PCR_OI at 1860 is nearly 0.8, which if increases will see strong move towards 19000 zones again."
On Bank Nifty, Rout added, "option chain on weekly basis reflects various strikes on PE side adding over 20 lakh shares, with max additions seen at 43500PE - nearly 30 lakh OI shares. 43800PE/43900PE also witnesses strong fresh built up, hinting on immediate support. CE writers active at 44000 strike, followed by 45000CE, thus the data built-up reflects on the upside momentum to continue for new round of highs."
Here are the intraday calls by experts for Wednesday:
Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher:
- Buy Naukri (Info Edge) at ₹4160 with a stoploss of ₹4100 for a target price of ₹4280
- Buy Bajaj Finance at ₹6620 with a stoploss of ₹6530 for a target price of ₹6800
Anuj Gupta, Vice President -Research at IIFL Securities
- Buy Yes Bank for a stop loss of ₹16 and a target price of ₹30
- Buy Suzlon Energy with a stop loss of ₹8 for a target price of ₹13
Ravi Singh, Vice President and Head of Research, Share India
- Buy Infosys at ₹1570 for a target price of ₹1600 with a stop loss of ₹1550
- Buy Tata Power at ₹220 for a target price of ₹235 with a stop loss of ₹210
Sumeet Bagadia, Executive Director at Choice Broking
- Buy SBI Life Insurance with a stop loss of ₹1260 for a target price of ₹1300-1320
- Buy Cipla with a stop loss of ₹1090 for a target price of ₹1130-1140
Ravi Singhal, CEO, GCL
- Buy Federal Bank at ₹136 with a stop loss of ₹135 for a target price of ₹144
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
