There are two major factors supporting the ongoing bull run: one, the strength of the US markets, riding on the highly accommodative monetary stance of the Fed; two, the exuberance of the retail investors who are exerting a disproportionate influence on the market, said an analyst.
“While retail investor participation is a desirable trend, it is important to note the fact that the quality of retail investment – chasing low-quality cheap stocks – leaves a lot to be desired. The present rising tide will eventually turn and if the market turns sharply bearish, many retail investors will be stuck with low-grade stocks causing huge wealth destruction. Retail investors, therefore, will have to exercise great caution in their investment,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
How are the bluechips doing?
After opening in the green, benchmark indices held above the flatline. At 9.27 am, BSE flagship Sensex was up 46 points or 0.08 per cent to 54,539. NSE benchmark Nifty advanced 27 points or 0.16 per cent to 16,321.
“The Doji candlestick formed at high is indecisive in nature; the break of high or low will decide further resumption or reversal in trend. On a weekly scale, we are witnessing the long spread bullish candle, indicating the bulls are in control of trend,” said Brijesh Bhatia, Senior Research Analyst Equitymaster.
“Banking stocks were in action ahead of the RBI Monetary policy schedule today. Bank Nifty is underperforming against Nifty since February 2021 and is yet to break the previous high of 37,708. I won’t be surprised if Bank Nifty outperforms post policy.”
In the 50-share pack Nifty, IndusInd Bank was the biggest gainer, up 2.73 per cent. Tata Consumer, IndianOil, , M&M, JSW Steel, Bharat Petroleum, NTPC and were among other gainers.
was the top loser in the pack, down 2.52 per cent. , , Divi’s Labs, ITC, Titan, Nestle India, TCS, Bajaj Auto, Dr Reddy’s Labs and Reliance Industries were other losers in the pack.
FACTORS DRIVING MARKETS
Good news
RBI Policy meet: Market will react to the commentary from RBI governor later in the day. Most analysts believe there will not be any change in the policy rates. In that case, the market will look for any cues on the timeline of tapering.
Macro data upbeat: Progressive economic data indicates strong rebound from the impact of the second wave. This is reflected by buoyant tax collections, falling fiscal deficit, low CAD, ample forex reserves, expanding PMI, booming exports, and softening crude.
Bad news:
Another hawk appears: Fed Governor Christopher Waller said it may be possible for the US central bank to start withdrawing its accommodative monetary policy sooner than some expect given the progress in economic recovery and improving labour market.
Virus scare: Daily new Covid-19 cases have climbed to a six-month high in the United States, with more than 100,000 infections reported nationwide as the Delta variant ravaged states with lower vaccination rates.
Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.51 per cent, while Nifty Midcap climbed 0.52 per cent. Broadest index on NSE, Nifty500 was up 0.26 per cent.
Alok Industries, Future Retail, Vakrangee, Tata Chemicals, Aditya Birla Capital and IDFC First Bank were gainers from the space while Escorts, PI Industries, Ipca Labs, PNB Housing, CAMS and Quess Corps were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.35 per cent, dragged down by Chinese bluechips, which fell 0.56 per cent and Hong Kong down 0.46 per cent. Japan’s Nikkei rose 0.11 per cent.
The Nasdaq and S&P 500 closed at record levels on Thursday after a spate of strong corporate earnings and a further decline in US unemployment claims. Eyes are now on the jobs report for July due later today.
US stock futures, the S&P 500 e-minis, were down 0.1 per cent.
