Key benchmark indices zoomed nearly 2 per cent in morning deals on Monday, riding on a firm global momentum. The benchmark S&P BSE Sensex rallied over 950 points to quote at 55,863, while the Nifty50 advanced 284 points to 16,636. Indian stocks saw their market value rising Rs 4.4 lakh crore as investors on the Dalal Street tracked Friday’s surge in US stocks amid hopes of inflation peaking soon.
According to analysts, domestic investors took inspiration from China easing Covid curbs and the US Fed’s minutes from the early May meeting released on Wednesday which drove speculation over a potential pause in interest rate hikes later this year after further monetary action in June and July. VK Vijayakumar, chief investment strategist at Geojit Financial Services, said: “The market is set for a near-term rally. The sharp upswing in Nasdaq & S&P 500 late last week indicates near-term trend reversal.”
Here are factors fueling the stock market rally today-
Deepak Jasani, head of retail research, HDFC Securities, “Indian markets rose for the third consecutive session on May 30 following positive global cues due to China easing Covid curbs and sharp Friday gains on the wall street. Some local factors helping the mood include the early arrival of monsoon in Kerala raising hopes of a favourable impact on Agri crops. Stocks were anyway due for a bounce after continuously underperforming since early April 2022. 16800-16850 level on the Nifty could be tough to breach in the near term.”
1) US Markets Rally
US stocks enjoyed a broad-based rally on Friday, while the yield on benchmark US Treasuries fell after data showed that U.S. consumer spending rose in April and the uptick in inflation slowed, two signs the world’s largest economy could be on track to grow this quarter. The Dow Jones Industrial Average rose 575.77 points, or 1.76 per cent, to 33,212.96, the S&P 500 gained 100.4 points, or 2.47 per cent, to 4,158.24 and the Nasdaq Composite added 390.48 points, or 3.33 per cent, to 12,131.13.
2) Asian Equities Remain Higher
Asian equities traded higher after China eased Covid restrictions in Shanghai and Bejing and offered a slew of economic support measures. Shanghai will loosen Covid test requirements for people who enter public places and Beijing will loosen mobility curbs in several districts from Sunday after authorities said its outbreak is under control. Nikkei rose two percent, Hang Seng gained 1.9 per cent, CSI 300 0.5 per cent, Taiwan and Kospi were up 1.7 and 1.4 per cent respectively.
3) China Relaxes Covid Curbs
Asian equities traded higher after China eased Covid restrictions in Shanghai and Bejing and offered a slew of economic support measures. Shanghai will loosen Covid test requirements for people who enter public places and Beijing will loosen mobility curbs in several districts from Sunday after authorities said its outbreak is under control. Nikkei rose two percent, Hang Seng gained 1.9 per cent, CSI 300 0.5 per cent, Taiwan and Kospi were up 1.7 and 1.4 per cent respectively.
4) Buying in Heavyweights
Five stocks namely the HDFC duo, IT majors Infosys and TCS and Reliance Industries alone contributed over 550 points positively to Sensex rise. Bargain hunting and a recent fall in rupee is boosting IT shares that generate a major chunk of their revenues from exports.
Investors also await GDP data for the March quarter which is due for release on May 31. Analysts have a wide range of growth forecasts from 2.7 to 4.5 per cent for the quarter. State Bank of India expects growth at 2.7 per cent for the quarter
6) Monsoons Arrive Early
Southwest monsoon has set in over Kerala on Sunday, three days ahead of its normal onset date of June 1, the India Meteorological Department (IMD) said. This, analysts believe, is a good news for the India that is battling soaring inflation. Timely and normal rains can boost production for monsoon-sown crops such as rice, soya beans and pulses etc.
7) Nifty Technical Outlook
Anand James of Geojit Financial Sevices said: “The 16400 wall that had turned down at least three bold upside attempts in the last 30 days, still stands firm, but will be facing one of the strongest challenges shortly, as the event risks in the coming fortnight hold an element of positive surprise as well. The argument that Nifty’s bounce is off just the 23 per cent fibo of the 2020 rally, loses its voice when compared with S&P500’s turn higher from the 62 per cent fibo, bouncing over 7 per cent, and with more room for upside before mean reversion challenges surface. This encourages us to stick with a 16,750 move initiated last week, even though the default approach would be to expect rejection trades at 16,415. The downside risk level identified as 16,084 last Friday will be moved higher to 16186/51region. In fact, there is no doubt that Nifty is poised for a gigantic move shortly. Being at the upper extremity of a month-old parallel consolidation range, downsides have a 1,400 point potential, as opposed to 700 point potential for upsides, as a measure of the range and the side that Nifty would be coming out of. That said, the fortnight ahead will be one for the risk takers.”
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Sensex Soars 1,100 pts, Nifty Above 16,600: Bulls Roar on D-Street; Why Market is Rising - News18
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