The stock markets made a strong start in the second week of the new year. Despite mixed signals from the global market, the Indian stock market not only opened in the green, but the BSE Sensex crossed its 60,000 level again. On the other hand, Nifty also closed above the psychological level of 18,000 mark. The broader market also saw a bullish phase today and Nifty Midcap 100 and Smallcap 100 saw a jump of 0.7 per cent and 1.2 per cent respectively.
On the first day of the week i.e. on Monday, the Nifty-50 where increased by 190.60 points (1.07%) closed at the level of 18,003. On the other hand, Sensex-30 rose by about 651 points (1.09%) to reach 60,395 points.
There were four reasons behind the tremendous rally in the stock markets today:
1. Results of companies
Companies have started releasing their third quarter results. The stock market expects the earnings of these companies to be good. In the next few days, some big companies of the IT sector and HDFC Bank are going to release their results. Broadly, the stock market is expecting double-digit growth in earnings of some sector companies including IT, due to which good buying is being seen in them.
“Overall earnings growth is expected to remain strong, thereby reducing valuation concerns in the Indian market,” said Sonam Srivastava, Founder, Wright Research. “Earnings for companies are expected to remain strong in the December quarter due to good economic growth and pick-up in demand during the festive season. Good numbers are expected from IT sector companies. Banking sector,” he said. may also show good performance, which will be welcome. Apart from this, the quarter is expected to be good for industrials, realty and cement sectors.”
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2. Banking stocks came under the radar of buyers
The market is witnessing a rally since December 21 and the banking sector has played an important role in this. Apart from this, many banks have released their loan provisioning data and this has increased the expectation of good December quarter results for the banking sector. These have strengthened the sentiments of the buyers regarding the banking sector.
Since December 31, Nifty Bank has gained 9% so far and is now trading above the 38,000 mark. Federal Bank, PNB, RBL Bank, SBI, Kotak Mahindra Bank, ICICI Bank, IDFC First Bank, Axis Bank, Bandhan Bank and AU Small Finance Bank gained 1 to 4% today.
Yash Shah, Head of Equity Research, Samco Securities said, “10 out of 13 banks have reported double-digit growth in loan growth in the third quarter business updates issued by them. This has led to investor interest in banking stocks. There is an increase in these and buying is being seen in them. The market expects the third quarter results of banks to be better than the second quarter.
Earlier, our affiliate channel CNBC Awaaz had reported in a report that the government is considering increasing the foreign investment limit in public sector banks from the current 20 per cent to 74 per cent, after which the Nifty PSU Bank index rose more than 3 per cent. A jump was seen. The move, if implemented, is likely to go a long way in the privatization efforts of some public sector banks in the next financial year.
3. Realty stocks also rise
The initial sales figures released by real estate companies are very strong and promising, which has given rise to real estate stocks. The Nifty Realty index has gained 10 per cent in the last three weeks or so, especially since December 20.
Today i.e. on Monday, the Nifty Realty Index gained 1.5 percent. The biggest increase of 8 per cent was seen in Sunteck Realty, which has registered 29 per cent growth in pre-sales figures and 30 per cent growth in collections on a quarterly basis.
4. Technical View
After the formation of a Bullish Candle in Nifty50 last week, a Bullish Candlestick pattern has formed on the Daily Charts today, which indicates positive Momentum. Analysts believe that Nifty has crossed the psychological level of 18,000 and can now go comfortably towards 18,200-18,300, after which it will face some resistance.
Sameet Chavan, Chief Analyst, Technical & Derivatives at Angel One, said, “It is clear from the action of the last two trading sessions that after the Nifty breaks 18000 and shows strength, Nifty will see further gains. On the other hand when As long as Nifty remains in the range of 17,600–17,500 then we don’t need to panic and would recommend buying every fall till this level. If there is no sudden big negative news in the global market, then we will get above 18000 in the market. The pre-budget rally of May is likely to be seen soon.”
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