The primary driver of this bull run has been liquidity and therefore a reversal of the trend is likely to happen only with decline in liquidity, particularly capital outflows triggered by FPI selling. Even though there were signs of this happening in July, there are no such signals now, said an analyst.
“The outperformance of the broader market continues this month with a disproportionate rise in some mid & smallcap stocks. There is hyper speculative activity in the broader market. Investors should be cautious operating in this segment,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
How are the bluechips doing?
After opening in the green, benchmark indices rose further higher. At 9.24 am, BSE flagship Sensex was up 118 points or 0.20 per cent to 58,365. NSE benchmark Nifty rose 36 points or 0.21 per cent to 17,413.
“Crucial support for Nifty50 is 17,300, while Nifty may face some resistance at 17,500,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty, Titan was the biggest gainer, up 2.97 per cent.
, Bharti Airtel, Shree Cement, Bajaj Auto, M&M, Hero MotoCorp and HDFC Life Insurance were among other gainers.
Axis Bank was the top loser in the pack, down 0.77 per cent. BPCL, Tech Mahindra, HCL Tech, , Kotak Mahindra Bank and HDFC Bank were among those that traded in the red.
FACTORS DRIVING MARKETS
Good news
US inflation peaks: Overnight, the US Labor Department reported the Consumer Price Index in August posted its smallest gain in six months, suggesting inflation has probably peaked, aligning with Fed Chair Jerome Powell’s long-held belief that high inflation is transitory.
Yields fall: Yield on the benchmark 10-year note US10YT fell as low as 1.263 per cent, its lowest since Aug. 24. However, they recovered slightly and were little changed in Asia at 1.285 per cent, while the dollar was steady also having slipped against a basket of its peers on the inflation figures.
Govt action: Cabinet may approve the PLI scheme for the auto sector today and the main focus could be on EV and hydrogen fuel cell vehicles, due to which we may see some action in stocks such as Tata Motors. The Centre may also provide some good news on the telecom front.
Bad news
China data: A burst of data out of China showed businesses were grappling with the impact of localised lockdowns following sporadic Covid-19 outbreaks, supply bottlenecks and high raw materials costs.
Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.19 per cent, while Nifty Midcap added 0.65 per cent. Broadest index on NSE, Nifty 500 was up 0.29 per cent.
Rossari Biotech, IRB Infradevelopers, Wockhardt, Ipca Labs, JSW Energy and Gujarat Gas were gainers from the space while Trent, Crompton Greaves, IDFC First Bank, CDSL, IDFC and JK Lakshmi Cement were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.82 per cent, extending earlier losses after the release of the Chinese data, while Tokyo’s Nikkei shed 0.89 per cent, moving off a more than 31-year closing-high the day before.
Chinese bluechips were down 0.73 per cent. The Hong Kong benchmark shed 0.87 per cent dragged down by casino stocks as the gaming hub of Macau begins a consultation ahead of a closely watched rebidding of its multi-billion dollar casinos next year.
