Bulls wrest control of Dalal Street: Key factors driving the market

Bulls wrest control of Dalal Street: Key factors driving the market

NEW DELHI: Buying returned on Dalal Street after two days of massive sell-off as all segments of the market were in demand as the upcoming US government pushed for a big stimulus, which will pump a massive amount of money into the market.

Valuations of major stocks have also cooled off after two days of slump, which attracted investor interest again. Reliance Industries has especially been in the spotlight after months of trading in a range.

“The major positive development for markets today is the Treasury Secretary-elect Janet Yellen’s comment on the need for ‘big stimulus’. Further big stimulus along with the huge liquidity created by the unprecedented monetary stimulus can keep markets buoyant; but there is a risk of bubble valuations with its vulnerability to sharp corrections, even crashes,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“Meanwhile, midcaps have turned weak and strong large-caps like HDFC bank & RIL have become strong. High delivery based buying in these stocks indicates their improving prospects.”

Factors driving markets

  • Big stimulus needed: US President-elect Joe Biden’s nominee to run the Treasury Department, Janet Yellen, will tell the Senate Finance Committee on Tuesday that the government must “act big” with its next coronavirus relief package.
  • Europe backs money printing: Eurozone finance ministers pledged continued fiscal support for their economies on Monday and discussed the design of post-pandemic recovery plans as the European Commission warned the Covid-19 crisis was making the bloc’s economic imbalances worse.

How are bluechips doing

After opening in the green, benchmark indices strengthened their lead. At 11.20 am, BSE flagship Sensex was up 566 points or 1.17 per cent to 49,130. NSE benchmark Nifty followed and rose 165 points or 1.16 per cent to 14,440.

“Although we have opened with a gap up, I would be wary of going long immediately. The Nifty has a resistance around 14,550-14,600. If we can conquer that, we should be headed to 14,900. Until then there is every possibility to go down to levels closer to 14,100 and then 14,000,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.

In the 50-share pack Nifty, Grasim Industries was the biggest gainer, up 3.01 per cent. Tata Motors, L&T, SBI Life Insurance, ONGC, Reliance Industries and Cipla were among other gainers.

Mahindra & Mahindra was the top loser in the pack, down 0.60 per cent. HDFC Bank, ITC, Hindustan Unilever and Bharat Petroleum were other losers in the pack.

Broader markets

Broader market indices traded with gains outperforming their headline peers in the morning trade. Nifty Smallcap added 1.28 per cent while Nifty Midcap climbed 1.29 per cent. Broadest index on NSE, Nifty 500 was up 0.83 per cent.

Bajaj Electricals, Sterlite Tech, Rain Industries, Chola Finance, L&T Tech Services and Godrej Properties were among major gainers from the space while Jubilant Foodworks, Dalmia Bharat, Sanofi, Alok Industries, Linde India and Indiamart were under selling pressure.

Global markets

MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.98 per cent, to be a whisker from record highs. Japan’s Nikkei bounced 1.5 per cent, recovering all the losses suffered on Monday when caution had dominated markets.

Australian shares climbed 1.25 per cent as investors bet on news that Queensland state was set to lift virus-led restrictions. Chinese blue-chips remained flat while Hong Kong’s Hang Seng advanced 1.8 per cent.

US stocks also looked a little steadier as futures for the S&P 500 added 0.51 per cent and NASDAQ futures 0.59 per cent.

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