The fall in prices of crude oil is a major tailwind for the Indian equity markets whereas FIIs’ selling has also come down significantly. Global markets have also digested the expected rate hike of 25 basis points by the US Fed.
Bulls dominated on Dalal Street amid positive global cues, crude oil price cool-off. While the BSE Sensex jumped 1,047 points or 2 per cent to 56,861, Nifty 50 index rose to 16,987 minutes before closing. Benchmark indices also gained on strength of bullish signs from other Asian markets. “The Indian economy is well positioned to handle any incoming external shock in terms of capital outflow triggered by an unpredictable geopolitical climate, according to the Finance Ministry’s Monthly Economic Review report, but inflation remains a concern,” said Likhita Chepa, Senior Research Analyst, Capitalvia Global Research.
What pulled markets higher?
“The rally can be attributed to an overnight rally in the US market and a sharp fall in crude oil prices. It seems that the market is already discounting the end of Russia-Ukraine tension soon therefore we are seeing a sharp reversal in commodity prices while a surge in covid cases and lockdown in China is also putting pressure on prices of crude oil. The fall in prices of crude oil is a major tailwind for the Indian equity markets whereas FIIs’ selling has also come down significantly. Global markets have also digested the expected rate hike of 25 basis points by the US Fed. However some volatility is expected after the FOMC meeting outcome overnight today,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Neeraj Chadawar, Head – Quantitative Equity Research, Axis Securities said, “The Indian market rebounded from the losses after taking positive cues from Wall Street. Sentiments were further supported by the cool-off in the oil prices, and the progress on the peace talk between Russia and Ukraine conflict. Now the market is waiting for the outcome of the FED meeting as the current geopolitical developments are adding further inflationary pressure in the global market, and it is important to see the view of central banks. The wider view is that central banks first focus more on controlling the inflationary effects rather than growth effects.”
Nifty may rally towards 17,300 if 17,000 breached
Santosh Meena, Head of Research, Swastika Investmart Ltd. “Technically, Nifty is trading near-critical level of 16980 which is its 200-DMA and 17000 is also a psychological hurdle, therefore, we are seeing some pause around this level but if Nifty manages to take out the 17000 mark decisively then we can expect a rally towards 17300 level. On the downside, 16700 is an immediate support level while 16500-16400 is a sacrosanct demand zone.”
“Volatility will continue to be on a higher side before we conclude concrete market direction. It is likely to go down to settle below the long-term average as soon as we enter into a rate hike cycle, and the trajectory for the actual number of rate hikes projected for 2022 will be known to the market. The second half of 2022 is likely to be more stable compared to the first half,” said Neeraj Chadawar, Head – Quantitative Equity Research, Axis Securities.