Sensex jumps over 300 points, Nifty above 24,300 to extend gains for the 4th day on monsoon revival and FII buying

The Indian stock market traded in the green on Monday, with Sensex and Nifty extending sharp gains for the fourth consecutive session as heavy rainfall revived monsoon hopes, FIIs turned net buyers and other factors further boosted investor sentiment.

Sensex gained above 300 points, while Nifty 50 was at 24,300 during Monday's trading session. Broader markets also opened in the green, with Nifty Midcap 100 and Nifty Smallcap 100 trading marginally higher.

Infosys shares jumped more than 1% to lead gains on Sensex. Bharat Electronics (BEL), Axis Bank, HCL Technologies, Eternal, UltraTech Cement, Maruti Suzuki and HDFC Bank shares gained nearly 1% each to follow. Bucking the trend, IndiGo, Kotak Mahindra Bank and Asian Paints shares dropped over 1% each.


The optimism comes while India VIX, which measures volatility in market, dropped nearly 4% to 11.80. Sectorally, Nifty Realty gained around 1% to lead gains, while Nifty Private Bank slipped into the red. The overall market breadth was positive, as 1,284 stocks advanced on NSE, while 1,125 declined and 167 remained unchanged.

Why is stock market rising today?

After expectations of below-normal rainfall clouded market sentiment earlier, various parts of India saw heavy rainfall over the weekend, with the India Meteorological Department (IMD) placing several cities including Mumbai on red alert.

Additionally, foreign institutional investors remained net buyers of Indian equities on Friday, purchasing shares worth more than Rs 1,355 crore on Dalal Street, according to provisional data available on NSE. According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, the revival of monsoon and FIIs turning buyers last Friday are positives for the market in the near-term.

What lies ahead?

From this week onwards, the market will start responding to the Q1 results which will begin on July 9 with IT heavyweight TCS, Vijayakumar highlighted. He said that Q1 results overall are likely to be subdued due to the energy shock and macro headwinds triggered by the conflict in West Asia.

“Now that the macro headwinds are behind us, the market will be looking forward to the potential trends in the rest of the year by taking cues from Q1 results. In Q1 financials and autos are likely to outperform while IT will report subdued results and modest guidance. Financials will report better-than- expected results driven by impressive credit growth of 17%. NBFCs in gold loan and consumer financing will report revenue and profit growth around 20%. In automobiles commercial vehicles and two-wheelers will report impressive numbers since the Q1 sales in these segments have been better-than-expected,” he said, adding that buying on dips would be a good strategy in the near term.

Technical view on Nifty

Despite the consecutive weeks of gains, Nifty has only reached the April’s highest closing figure from where a multi-month downtrend had begun, said Anand James, Chief Market Strategist, Geojit Investments. Friday’s pull back is good in a way, because it keeps the uptrend away from premature collapse, as the oscillators had begun to show signs of exhaustion, he added.

“We will continue to see 23,800 as a strong downside marker while we chase short term upsides with an eye on 24,170. Expect whip saw moves to 24,600, which may not be sustainable initially. However, a close above 24,400 could render the trend stable for a 24,800-25,250 move,” according to James.

(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)