Indian markets recovered strongly on Tuesday after two consecutive days of selloffs. Nifty surpassed the hurdle of 17,900 levels, while Sensex stayed above the psychological mark of 61,000. Banking stocks were the star performers followed by IT stocks. Strong buying in heavyweight Reliance Industries also contributed to the upside. Domestic equities reacted to key economic indicators and positive global cues. Also, FIIs continued their buying spree in the equities further lifting momentum. Rupee, however, edged lower ahead of US inflation data.
Sensex rose by 600.42 points or 0.99% to end at 61,032.26. While Nifty 50 soared by 158.95 points or 0.89% to close at 17,929.85. Bank Nifty gained by 366.15 points or 0.89% to finish at 41,648.35.
India’s volatility index was down by nearly 2%.
On Tuesday’s performance, Ajit Mishra, VP – of Technical Research, at Religare Broking said, Markets recovered strongly on Tuesday and gained nearly a percent. Initially, upbeat global cues triggered a firm start which further strengthened with buying in select heavyweights as the day progressed. Consequently, Nifty surpassed the hurdle at 17900 and finally settled around the day’s high.
He further added, a mixed trend was witnessed on the sectoral front wherein metal, FMCG, IT, and banking posted decent gains while realty, auto, and healthcare ended lower.
Large-cap stocks witnessed buying momentum, on the contrary, smallcap and midcaps struggled in the broader market. BSE Midcap and Smallcap index have shed around 108 points and 171 points respectively.
In terms of sectoral indices, BSE BANKEX led the rally with an upside of over 395 points. IT index also contributed significantly by surging nearly 293 points. FMCG and Metal index on BSE too climbed by nearly a percent.
Sensex gainers were heavyweights such as ITC, Reliance Industries, Bajaj Finance, ICICI Bank, Infosys, Axis Bank, and Wipro.
Meanwhile, Sensex losers were NTPC, Sun Pharma, L&T, Ultratech Cement, and Titan.
On Tuesday, foreign institutional investors (FIIs) bought ₹1,305.30 crore in Indian equities, while domestic institutional investors purchased ₹204.79 crore. FIIs were net buyers on February 13 and 10th as well with an inflow of ₹1,322.39 crore and ₹1,458.02 crore respectively.
At the interbank forex market, the rupee shrugged off the bullish tone in domestic equities and dipped marginally against the US dollar to end at 82.7550 compared to the previous day’s print of 82.7175 per dollar. The local unit witnessed a low-volume session as investors waited for US inflation data which is scheduled to be announced later in the day. However, rupee forward-premiums picked up tracking higher-than-expected India inflation data for January. The 1-year rupee implied forward rate climbed to 2.12%.
As per, Vinod Nair, Head of Research at Geojit Financial Services said, domestic indices edged higher, inspired by their global counterparts, as investors await the US inflation numbers today. The whammy over India’s retail inflation breaching the RBI’s tolerance level was cooled by WPI inflation easing to 4.73% in January. IT stocks were in focus as investors anticipated a slowdown in US inflation, which could result in favourable Fed policy.”
India’s retail inflation breached RBI’s upper tolerance limit to reach a 3-month high of 6.52% in January due to soaring food prices. The CPI had eased between November to December under RBI’s upper limit of 6%.
Meanwhile, wholesale price inflation cooled at a two-year low to 4.73% in January. This would be the eighth consecutive month of relaxation in WPI.
On the other hand, India’s industrial output growth came in at 4.3% in December 2022 — lower than 7.3% in November same year — due to muted performance in manufacturing output.
Going ahead, Mishra said, indications are favourable for further recovery and we’re now eyeing 18,200 in Nifty. However, the move could be gradual citing restricted participation by select index heavyweights. Traders should align their positions accordingly and prefer index majors over others.
According to Rohan Shah-head technical analyst at Stoxbox, on the daily chart nifty forms a higher high positive candle. Intraday traders can look for a long opportunity if the market opens on the positive side tomorrow & the price sustains above today’s high of 17,954 for the long target of 18030 intraday. Traders can consider a short intraday opportunity if Nifty is not able to sustain above 17,954 or if selling pressure comes from 17,981.