Nifty: Nifty recovers 18K on earnings expectations
Banks led the rally on expectations for better loan growth while state lenders took advantage of reports that the government is considering increasing the holding limit of foreign portfolio investors (REITs).
The Nifty Index closed over 18,000 for the first time since November 15, 2021, ending the day at 18,003.30, up 190.60 points, or 1.07%, from the previous close .
The Sensex finished up 650.98 points, or 1.09%, at 60,395.63.
All sector indices finished in the green, with the BSE capital goods, real estate and industrial indices gaining at least 2%. The BSE Smallcap index rose 1.19%, while the Midcap index rose 0.69%. The Nifty PSU Bank index jumped 3.23%.
HDFC, ICICI Bank and Infosys gained more than 2%.
“Markets have gained momentum in recent days due to the low impact of the Omicron variant, resulting in less stringent restrictions / lockdowns by various government authorities,” said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.
“This has raised hopes of an economic recovery as well as the expectation of strong profits for companies.”
Foreign investors became net buyers in the first week of January by pumping 3,202 crore rupees into Indian stocks after three months of selling shares for nearly 79,000 crore rupees in the secondary market. However, they sold shares worth Rs 124 crore on Monday, according to provisional stock market figures.
No less than 2,630 stocks, or 70%, out of 3,748 that traded on BSE gained on Monday. Also, 976 actions blocked in the upper circuit against 170 actions that ended in the lower circuit. The uptrend is despite Citi lowering India’s GDP forecast from 9.8% to 9% on Monday, citing an economic slowdown in the third quarter and Omicron uncertainty.
Analysts expect the Nifty50 companies to post 12.1% year-on-year growth in aggregate revenue for the December quarter, making it the fourth consecutive period of double-digit revenue growth. Net profit is expected to increase by 29.6%.
“We believe that a comprehensive and calibrated economic recovery is envisioned, although the timing remains very uncertain,” said Mitul Shah, head of research at Reliance Securities. “The recent increase in Covid cases in India is cause for concern now and its development in the coming days would be a deciding factor for the market trend during the month. We would be monitoring the situation regarding the recent Covid surge and the Omicron issue. ”
Technical charts also indicate strong momentum and buying interest with Nifty likely to hit 18,200 and 18,350 this week. “We don’t expect a significant price correction as the nuance in Nifty and Bank Nifty remains bullish,” said Ruchit Jain, research manager at online trading platform 5paisa.com. “On the other hand, 17,800 and 17,650 would be the immediate supports, and any decline in that direction should be interpreted as a buying opportunity.”