Monday's rally in the stock market was largely anchored by largecap stocks, especially banking shares, with three lenders from Sensex hitting fresh highs, even as the broader market breadth, as suggested by advance-to-decline ratio, remained fairly muted.
Initial strong quarterly earnings from banks that account for one-third of Nifty weightage, lifted investor sentiment. The resilience in Asian markets, despite rising US bond yields and fears of higher-for-longer interest rates added to the sentiment, as the BSE listed companies together added Rs 2.4 lakh crore to their market capitalisation.
"After a brief shakeout, the EM revival is rekindled. We have already highlighted how the global equity correction ended when the Long-term Breadth Indicator reached the equilibrium zone. The same can be seen here for the Emerging Markets. We believe this to be the preparation for a larger take-off," Elara Securities said in a note.
While the BSE Sensex hit a day's high of 74,719.88 and was close to its record levels of 75,124.28, Nifty too hit a high of 22,655.35. Here is Monday's rally in numbers:
Bank stocks contribute half to Sensex rise Three Sensex stocks hit their 52-week highs today. They were: ICICI Bank Ltd, Axis Bank and State Bank of India. Need not say the day belonged to banking stocks. Five bank stocks including HDFC Bank, Kotak Mahindra Bank, IndusInd Bank, and three three stocks stated above, contributed nearly half of the index gains for the day.
"The fresh buoyancy in the banking index has paved the way for a new high in the Nifty index while others may continue to offer support on a rotational basis. We thus reiterate our view to continue with a “buy on dips” approach and focus on stock selection," said Ajit Mishra – SVP, Research at Religare Broking.
284 stocks at new high, 436 hit upper circuits A total fo 284 stocks on BSE hit their fresh 52-week highs while just 11 shares hit their respective 52-week lows. BHEL, Biocon, Canara Bank, Dixon Tech, Grasim Industries, Interglobe Aviation, Tata Power, NMDC, Concor, Vedanta, Voltas and Trent were some of the stocks hitting their 52-week highs today.
No broad-based rally While 26 of 30 Sensex stock settled lower on Monday, declines in the BSE smallcap index at 515 outpaced advanced at 479 for the day. In total, 2,028 actively-traded stocks settled higher on BSE against 1,884 declines. The BSE Smallcap index (up 0.1 per cent) and the BSE midcap index (up 0.79 per cent) underperformed the BSE Sensex that gained 1.3 per cent for the day.
Where are stock indices headed?
Nifty has closed positively in seven out of 10 instances in the past decade, with an average return of 2.3 per cent. Current technical and derivative analyses support the idea of Nifty reaching all-time highs of 23,000 and potentially 23,500 in the upcoming month, said Choice Broking's research analyst Mandar Bhojne.
"The Relative Strength Index (RSI) hovering around 60 suggests strong momentum in the index. Moreover, the price is finding support from the 20-day Exponential Moving Average (EMA) and is trading above all key EMAs, indicating bullish sentiment, he said.