Sensex, Nifty surge 1.5% in 5 sessions amid decent Q4 earnings, positive global cues. What lies ahead?

Indian equity benchmarks ended the passing week with a gain of around 1.5 per cent with frontline gauges recapturing their crucial 62,500 (Sensex) and 18,450 (Nifty) levels ahead of key gross domestic product data due next week. Sentiments largely remained upbeat during the week buoyed by decent quarter-four earnings by major stocks. 

The global cues remained mixed during the week as investors remain worried about the ongoing debt ceiling negotiations in the US, the resilience of the banking space, and the geopolitical situation in Europe. However, Indian equities got a boost from the rise in US stock markets in the last two trading sessions. 

Market veteran Deepak Jasani, Head of Retail Research at HDFC Securities, said: “World markets were mixed on Friday, amidst optimism that Congress and the US President will strike a deal to unlock a vote for lifting the U.S. government’s debt ceiling and avert a potentially disastrous default although growing concerns over a slowing global economy restrained investors.”  

Jasani added: “Nifty gained 1.63 per cent over the week helped by a 0.97 per cent rise on Friday. Upmove on Friday showed strength with wider participation. Nifty could now trade in the 18660-18393 band over the near term.”  

As many as 43 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a gain of 13.3 per cent, Divi's Laboratories emerged as the top gainer in the index. It was followed by ITC (5.7 per cent), Adani Ports (5.6 per cent), Sun Pharma (4.8 per cent), and Tech Mahindra (4 per cent). Wipro, HCL Technologies, SBI Life Insurance and Infosys also advanced by over three per cent. On the other hand, Housing Development Finance Corporation, HDFC Bank, and Grasim Industries declined 2.3 per cent, 1.9 per cent, and 1.6 per cent, respectively.   

Sector-wise, all major sectoral indices have posted significant weekly gains. The BSE Information Technology index surged the most (3.7 per cent). While BSE Healthcare and BSE Fast Moving Consumer Goods indices have registered a surge of 3.3 per cent, and 3.1 per cent, respectively. Realty, Power, Oil & Gas and Auto sector indices also jumped over 2 per cent during the week gone by.   

Market Macros: Vinod Nair, Head of Research at Geojit Financial Services said that during the week, the performance of the domestic market was influenced by global cues, including concerns surrounding the ongoing US debt ceiling negotiations, the German recession, and hawkish comments from US Fed officials. “Significant surge in sales projections by chipmaker Nvidia helped in the recovery of the US tech sector. The release of the FOMC minutes revealed differences of opinion regarding future policy measures, with a slight leaning towards a less aggressive approach,” he said. 

Nair added Domestic investors traded cautiously during the week; however, driven by the strong growth forecast for the Indian economy, the market witnessed a smart recovery towards the end. “The IT and pharmaceutical sectors rebounded due to bargain opportunities and pent-up demand. With the upcoming Q4 GDP data, it is anticipated that India's FY23 GDP will surpass the earlier projected 7.0% growth rate, thereby improving the overall outlook of the Indian economy”.   

Technical Outlook for next week:  Amol Athawale, Technical Analyst (VP) at Kotak Securities said “The short-term market outlook is considered robust, with key levels at 18350/62000 acting as trend deciders. If the index moves above these levels, it could rise towards 18600/62800 and potentially continue further to 18680/63000. Conversely, if the index falls below 18350/62000, traders may prefer to exit their long positions.” 

He added the rally was driven by Reliance Industries and IT giants, along with positive global cues. If the index falls below 18250-18200/61700-61600, it may retest those levels. “For Bank Nifty traders, the 20-day SMA and 43600 are important to support levels. If the index remains above this zone, it could rally towards 44500-44700. However, a fall below 43600 may accelerate selling pressure, leading to a potential retest of levels around 43400-43000.” Athawale said. 

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