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Better-than-expected CPI inflation data fueled a bullish rally in Indian markets yesterday, with IT stocks finally snapping their 7-day losing streak and PSU banks further extending their gains. Indian markets could follow a positive performance in Asian countries on Wednesday as they followed gains on Wall Street after US inflation came in better than expected in November, raising hopes for a more dovish stance from the US Federal Reserve when it presents its policy results later in the day. . As for domestic stocks, the overall bias has started to improve and the Nifty 50 is expected to maintain support in the trading session.
The Sensex rose 402.73 points or 0.65% to close at 62,533.30 on Tuesday. Meanwhile, the Nifty 50 settled at 18,608 higher by 110.85 points or 0.6%. IT indices on BSE and NSE rose over 1.1% each. Nifty PSU Bank rallied over 3.8%, while private banks, financials, auto and capital goods also saw significant growth. Overall, Bank Nifty gained almost 238 points. Moreover, in the interbank foreign exchange market, the Indian rupee fell to 82.8050 against the US currency compared to the previous day’s close of 82.53.
Among the biggest bulls were IndusInd Bank, Bajaj Finance, Infosis, HCL Tech, M&M, TCS, Tech Mahindra, Bajaj Finserv and Ultratech Cement.
India’s consumer price index (CPI) inflation fell to an 11-month low of 5.88 percent in November – the first time it has fallen below the RBI’s upper tolerance limit since December last year.
Meanwhile, US inflation data coming in late yesterday was around 7.1% — well below the consensus estimate of 7.3%. This brings a sign of relief among investors as they estimate that the Fed will increase the rate by 50 basis points in the upcoming policy — which would be lower compared to three consecutive rate hikes of 75 basis points in the past policies.
According to Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher, the Nifty further extended gains after a decent pullback from the 18350 zone and is regaining strength with most of the heavyweight stocks like RIL, Infosys and TCS, M&M, ONGC, ITC and Bajaj Finance are showing positive momentum improving their trend.
Giving an outlook for Wednesday’s trading session, Parekh said, BankNifti which has already shown strength is gradually increasing and has almost touched 44000 level with upside targets expected at 45500-46000 levels. The overall bias has started to improve expected upside and retest the previous peak zone of 18816 in the coming days. Support for the day is seen at 18500 while resistance is seen at 18750. BankNifti would have a daily range of 43600-44500 levels.
Keeping this in mind, Parekh expects the Nifty 50 to find support around 18500/18450 while resistance is seen at 18750/18800. Meanwhile, Bank Nifty is expected to have support around 43600/43550 levels and resistance is seen around 44500/44550.
Here are Parekh’s intraday calls for Wednesday:
Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher:
– Buy Naukri (Info Edge) at ₹4160 with stoploss of ₹4100 for a target price of ₹4280
– Buy Bajaj Finance at ₹6620 with stoploss of ₹6530 for a target price of ₹6800
Disclaimer: The views and recommendations given above are those of individual analysts or brokerage firms and not of Mint. We advise investors to check with certified professionals before making any investment decision.
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