Sensex records muted gains on expiry day, Nifty above 24,200. What lies ahead?

The Indian stock market opened in the green on Thursday, with Sensex and Nifty recording slight gains in the morning as investors braced for expiry-day volatility.

Sensex gained around 10 points to trade at around 77,480 while Nifty 50 gained 11 points to hover around 24,220, as seen at 9.50 am. This came as India VIX, which measures volatility in the market, jumped around 3% to 10.84.

Kotak Mahindra Bank shares rose more than 2% to lead gains on Sensex, while Bharat Electronics, Tech Mahindra, ICICI Bank, Bajaj Finance and Axis Bank shares gained around 1% each. Bucking the trend, HCL Technologies, HDFC Bank, NTPC, Hindustan Unilever , Power Grid and IndiGo shares dropped around 1% each.


Among the sectors, Nifty Consumer Durables rose over half a percent to lead gains, while Nifty FMCG dropped 0.25%. The overall market breadth remained slightly negative, with NSE seeing 1,495 declines against 1,489 advances, while 100 stocks remained unchanged.

What lies ahead for Dalal Street?

Geopolitical tensions continue to weigh on markets, according to VK Vijayakumar, Chief Investment Strategist at Geojit Investments. Apart from the US-Iran tensions, there are reports of renewed escalation in the Russia-Ukraine conflict. Wheat prices have shot up and this will have implications for inflation and eventually on interest rates, the analyst said. “Even though the US bond yields have softened a bit, they continue to be too high. This will restrain a sharp rally in the market,” he added.

The dichotomous nature of the market trend - the midcap index at record highs while the Nifty is languishing about 8% below its peak- is likely to persist in the near-term since money flows and momentum support this SMIDs rally, according to Vijayakumar. “But fundamentally, this divergence is unsustainable beyond a point since valuations in SMIDs is getting stretched. Investors should look for stocks with good growth prospects but reasonable valuations. This combination is very rare,” he further said.

Technical view on Nifty

Though momentum eased away yesterday after Nifty’s initial rise, the downside marker remained intact, retaining hopes for resumption of upswing aiming 24,400 or 24,550 today, said Anand James, Chief Market Strategist, Geojit Investments.

That said, the analyst believes that Nifty’s inability to float above 24,220 could call for 24,060, though a vertical drop is less expected.

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