Overshadowing the bleak global macro outlook, domestic investor confidence and the resilience companies have shown so far in second quarter results turned the holiday season into Oktoberfest as the October Sensex finished more than 3,300 points higher as Nifty Mt 18K reclaimed.
It was the third consecutive time in as many months that Sensex crossed the 60,000 mark. “While it is primarily driven by the second quarter results, it indicates key supports are just below the 60K levels. It also means the Indian market is poised to move further off the ground once it hits the 60K levels. levels satisfactorily,” said Anmol Das, Head of Research, Teji Mandi.
Amid sectoral rotation in the market, the advantage is led by PSU stocks as Nifty PSU Bank, Nifty CPSE and Nifty PSE were the biggest sector gains. Heavyweight banks and IT stocks also contributed to the recovery.
In the near term, the market mood will be set by US Fed Chairman Jerome Powell, who is expected to announce a fourth consecutive round of 75 basis point rate hikes on Nov. 2 to tackle inflation.
“Investors are hoping this week for a smaller rate hike by the US Federal Reserve, contrary to earlier expectations of a more aggressive rate hike. This optimism has led to a sharp rise, pushing both local benchmark indices above their key psychological levels,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
However, if the Fed takes an aggressive stance, markets could undergo a major correction in the near term.
“Traders should not be surprised if the Fed avoids taking a casual side in the downshift debate ahead of its December meeting,” said Edward Moya, senior market analyst at OANDA.
The Sensex is now only about 1,500 points away from reaching all-time highs. “There is a greater chance that Indian markets will reach new highs by the end of this calendar year,” said Amit Jain, co-founder of Ashika Global Family Office Services.
Nifty’s track record of the past 10 years shows that the index delivered five times positive returns in November, with the pandemic-hit 2020 proving to be the best with a monthly return of 11.4%.
In addition to the US midterm elections next week, traders would also want to look for signals from RBI Governor Shaktikanta Das, who has scheduled a special meeting of the central bank’s monetary policy committee on Nov. 3 for failing to meet the inflation target for three consecutive quarters.
(Disclaimer: Recommendations, suggestions, views and opinions of the experts are their own. They do not represent the views of Economic Times)