In a financial landscape beset with global uncertainties, Indian stock markets exhibited commendable fortitude as the Nifty benchmark sustained its ascent above 19,550, accompanied by a 170-point boost in the Sensex.
This buoyancy, spanning three consecutive days, was led by the robust performance of midcap and smallcap indices, surging 1 percent and 0.6 percent, respectively. Even as the banking sector encountered slight headwinds, sectors such as healthcare and realty demonstrated resilience, each notching a gain of 1 percent.
Intriguingly, despite the lack of positive cues from Asian markets, the Nifty Mid-cap and Small-cap indices continued their relentless ascent, scaling fresh all-time highs. The optimism stems from the recent US August payrolls report, which, being softer than anticipated, has conjectured the postponement of a rate hike in September.
Technical analysis reveals that the Bank Nifty index is presently engaged in consolidation within a defined range, indicating a bullish undertone. Traders are advised to consider purchasing during market dips, given robust support at levels around 44,300-44,200. Furthermore, a breakout beyond 44,700 could trigger additional upward movements, particularly toward the 45,000 threshold, where notable open interest resides in call options.
Intriguingly, India’s services sector, though experiencing a slight ease in August activity, continued to exhibit elevated growth rates for new orders. Firms in the services sector reported a sharp upturn in new export business, prompting workforce expansion and increased output, according to a monthly survey. These trends are corroborated by the 25th consecutive month of the headline figure being above the neutral 50 threshold.
In sum, the Nifty traversed a relatively narrow 62-point range throughout the day, forming a higher low in comparison to the preceding day. This paves the way for a potential Nifty range of 19,645 to 19,452 in the near term.
While the markets have extended their gains for three consecutive sessions, the atmosphere remains somewhat range-bound, marked by a positive bias. Notable factors influencing this equilibrium include sharp rupee volatility, which could impact foreign institutional investor (FII) flows in the future.
Technically, the Nifty continues to trade comfortably above the 50 and 20-day Simple Moving Averages (SMA), with intraday charts revealing a formation of higher bottoms, a predominantly optimistic sign. The 19,500 level is deemed a pivotal support zone for the Nifty, with potential for movement upwards toward 19,620-19,650. Conversely, breaching 19,500 might induce bullish exit strategies, potentially leading to 19,450-19,420.
Financial markets continue to display resilience in the face of global volatility, underpinned by strong domestic factors. India’s robust services PMI, sustained demand, and a flourishing small and mid-cap segment have buoyed investor sentiment, mitigating the impact of weak global cues.
In a display of remarkable momentum, the Nifty Midcap index surged past the psychological 40,000 mark, amassing an impressive 35% gain over the past six months. Simultaneously, the smallcap index soared above 12,000, showcasing a remarkable 40% gain since March 2023. This remarkable performance in midcap and smallcap stocks aligns with growing risk appetite and domestic developments, reinforcing confidence among investors.
However, the Indian rupee faced headwinds, declining to its lowest level in a month due to concerns surrounding rising crude oil prices and weakening regional currencies. The dollar’s ascendancy against Asian currencies, buoyed by lackluster economic data from China and Europe, contributed to the rupee’s depreciation. The dollar’s safe-haven status, coupled with expectations of a hawkish Federal Reserve, bolstered its strength against global currencies.
In conclusion, Indian stock markets continue to exude resilience, capitalizing on domestic strengths to weather global contractions, while the rupee grapples with volatility amid external pressures.