NEW DELHI: Owing to a strong rally on Friday, which was in tandem with advancement made by global peers after US inflation data for October came lower than expected, benchmark Nifty and Sensex are now heading towards new peaks.
Lower inflation data raises hopes that the US Federal Reserve and central banks worldwide (including the RBI) would slow down and eventually stop hiking key interest rates in near future, a big positive for global equity market.
Sensex closed the Friday session about 2% higher at 61,795 while Nifty made a similar gain to close at 18,350 levels. The two indices had hit their all time high of 62,245 and 18,604 last year in October. Ajit Mishra, VP - Research, Religare Broking, said, “We are gradually progressing toward the record high now. However, mixed signals from the global front are still keeping the momentum in check.”
“Besides, we have not seen broad-based buying yet and participation from the index majors is also restricted. In such a scenario, sector selection and then cherry-picking the right stocks become critical,” he said.
“With the banking index at a record high, we expect the positive tone to continue and the IT index also looks upbeat to regain some strength after a year-long corrective phase. Meanwhile, other sectors may continue to see mixed participation so align the positions accordingly,” added Mishra.
In absence of any major event, participants will be eyeing crucial macroeconomic data viz. CPI and WPI inflation for cues. Besides, the performance of global indices and foreign flow trends will also remain on their radar.
“Since inflation in the US is showing a moderating trend, dollar and US bond yields are declining. This means FPIs are likely to buy more in the coming days,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Pravesh Gour, Senior Technical Analyst, Swastika Investmart, said, “Nifty is coming out of a broadening wedge formation and closed at important resistance at 18350. If it manages to sustain above that level, then we can anticipate a rise toward 18500, 18600, and 18800 levels.”