Sensex scales Mt 54K for first time: Key factors driving the market

NEW DELHI: Benchmark indices continued to move up hitting fresh record highs in the opening trade on Wednesday, thanks to buying in metals, banks and financial services stocks. Upbeat global markets, too, boosted the morale on Dalal Street.

FIIs, often regarded as representing smart money, have been pushed back by the sheer momentum of retail investors. FIIs who have been consistently selling in July on rational hopes of a correction in the overvalued market have been forced to buy on fears of losing out on the momentum, said an analyst.

“Retail investors and mutual funds flush with funds from NFOs are driving this market without much regard to valuations. Having broken the 15,950 Nifty upper band decisively, sheer momentum may take the market higher. With institutional money pouring in, largecaps are likely to outperform if the market continues its upward momentum. Leading banking stocks, which have been underperforming in this rally, are likely to catch up,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

How are the bluechips doing?
After opening in the green, benchmark indices moved further higher. At 1 pm, BSE flagship Sensex was up 437 points or 0.81 per cent to 54,261. NSE benchmark Nifty advanced 98 points or 0.60 per cent to 16,227

“Nifty finally hit an all-time high of 16,146 after consolidating for 62 days. As per F&O data, short covering rally can trigger the momentum towards 16,389-16,418 zone. The risk to this breakout is negative divergence on Relative Strength Indicator (RSI) on weekly charts, which cannot be overlooked,” said Brijesh Bhatia ,Senior Research Analyst Equitymaster.

In the 50-share pack Nifty, Tata Steel was the biggest gainer, up 2.23 per cent. HDFC, Shree Cement, Coal India, ICICI Bank, Adani Ports, JSW Steel and Dr Reddy’s Labs were among other gainers.

Bharti Airtel was the top loser in the pack, down 0.84 per cent. SBI, Tata Consumer, ONGC, Nestle India, Sun Pharma, SBI Life Insurance, Titan, Britannia and UltraTech Cement were other losers in the pack.

FACTORS DRIVING MARKETS
Good news
FII buying: Foreign institutional investors have turned buyers now. Net-net, they were buyers of domestic stocks to the tune of Rs 2,116.6 crore, data available with NSE suggested. DIIs were sellers to the tune of 298.54 crore.

Macro data upbeat: Progressive economic data indicates strong rebound from the impact of the second wave. All major domestic data like PMI index, GST collection, corporate earnings and export data favour a strong recovery.

Bad news:
Virus scare: Analysts cautioned about the rise in Delta infections of the coronavirus in Asia, with Chinese media reporting 31 provincial regions have warned residents against unnecessary travel in light of recent outbreaks.

Broader markets
Broader market indices were trading higher but underperformed their headline peers in morning trade. Nifty Smallcap was up 0.57 per cent, while Nifty Midcap climbed 0.36 per cent. Broadest index on NSE, Nifty 500 was up 0.56 per cent.

Trident, Granules India, Blue Dart, Zee Entertainment, Godrej Agrovet and Concor were gainers from the space while Coforge, Vodafone Idea, RBL Bank and Oberoi Realty were under selling pressure.

Global markets
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.1 per cent to the highest since July 26. Japan's Nikkei was in the red as were Chinese shares with the blue-chip index off 0.2 per cent.

Australian shares were a touch firmer but sentiment was marred by an unabating rise in Delta infections in Sydney, the country's biggest city.