The Indian equity benchmarks rebounded strongly from 52-week lows hit last week to log in their best weekly gain for the current month led by auto, consumer durables, FMCG and information technology shares, data from the National Stock Exchange showed. The Nifty 50 index climbed 2.65 per cent and Sensex advanced 1,367 points or 2.66 per cent. Last week, Nifty 50 and Sensex indices had crashed nearly 6 per cent.
The rebound in market came on the back of decline in commodity prices and bounce in the US market. Decline in commodity prices is positive for markets as they will provide much relief to the spiraling inflations, analysts said.
Copper prices, which are often seen as a bellwether for economic output due to their wide range of industrial and construction uses, are heading for their worst week in a year, while oil prices have dropped over concerns over slumping demand, Sumeet Bagadia, executive director at Choice Broking explained.
While the US recessionary fears are still at the forefront, but the slide in commodity prices has lifted the market. Cheaper oil is usually beneficial for oil-importing countries such as India, Bagadia said.
Buying was visible across sectors as thirteen of 15 sector gauges compiled by the National Stock Exchange ended higher led by the Nifty Auto index's 7 per cent gain. Nifty Consumer Durables, FMCG, IT, PSU Bank, Financial Services and Healthcare indexes also rose between 3-4.6 per cent.
On the flipside, Nifty Metal index fell 3 per cent on the back of decline in metal prices in international markets.
Mid- and small-cap shares also witnessed buying interest at Nifty Midcap 100 index advanced 2.21 per cent and Nifty Smallcap 100 index climbed 1.75 per cent.
Hero MotoCorp was top Nifty gainer, the stock rose 12 per cent to close at Rs 2,760. Eicher Motors, Hindustan Unilever, Maruti Suzuki, Mahindra & Mahindra, Asia Paints, HDFC, TCS and Divi's Labs also rose between 6-10 per cent.
On the flipside, Tata Steel was top Nifty loser, the stock fell 6 per cent to close at Rs 852. UPL, Reliance Industries, Hindcalo, Coal India, ONGC, NTPC and Bajaj Finserv were also among the losers.
The Nifty 50 index is likely to face resistance around 16,000 mark but the momentum indicators are indicating positive move in the markets, Bagadia told Outlook Business.
Nifty has formed a bullish candle on the weekly chart. However, the daily chart indicates that Index may face resistance from the level of 16,000 as 50 per cent Fibonacci retrenchment remained at this level. Index is still struggling to get the support of the 21 Simple Moving Average in the daily chart as well, Bagadia said.
"Indicators such as relative strength index (RSI) remained in the neutral zone while moving averages convergence divergence (MACD) suggested some positive cross over in daily time frame. Coming to the open interest (OI) data, on the call side the highest OI witnessed was 16,000 followed by 16,500 strike prices while on the put side, the highest OI was at 15,500 followed by 15,000 strike price. The trend may remain bullish in the short term. Overall, Nifty's strong support remains around 15,350 levels, while on the upside 16,200 may act as strong resistance for monthly expiry," Bagadia added.
Bagadia advises short term traders must ride with hedged positions to counter volatility andlong-term investors may opt for quality stocks as well as Index ETF for long term portfolio.
