It was a day the Nifty hit the psychological 12,000 mark and the Sensex made a new high, with both sliding back later. Much of the day’s trade was volatile, but because the undercurrent of the markets continued to be bullish, the volatility ended in favour of the Bulls. Nifty gained 43.8 points or 0.37 per cent to close at 11,961 while BSE’s Sensex touched a new high of 40,606, before closing at 40,469.78 with a gain of 221.55 points or 0.55 per cent. The last time Nifty touched the 12K mark was in early June this year.
While the initial trade was weak, with indices in the red for the first two hours, a conference call by Infosys made them change their mood. The indication from the Infosys management was that the company had not fudged any number to hide costs. This convinced the markets to change their stride, heading towards the green. “Even God cannot change Infosys numbers,” was how the Chairman of the company, Nandan Nilekani, put it, inducing the markets to show confidence in him.
Another factor which had a positive rub-off on the markets was the government’s reported intention to bring some measures to help the real estate sector. Not only did the basic real estate stocks witness an upward movement, the whole chain -- including housing finance, furnishing and supplier companies -- saw higher volumes, though few of them remained in the red territory. The thinking on Dalal Street was that if the real estate sector was given a push -- in either fiscal or non-fiscal way -- the impact on other sectors would be high.
Also, because real estate is one of the largest employers in the country, any boost here would lead to an increase in consumption. If consumption returns, the whole process of higher income and higher valuation would get re-started in mid and small-cap segments. As most companies in the real estate chain are in the mid to small-cap space, many first-time investors who entered the market in early 2018 had faced the brunt.
One more factor which helped the market was the numbers from some small public sector banks showing better than expected results. On Tuesday, after the Punjab National Bank showed higher provisions, there was some apprehension on the Street about PSU banks. But Wednesday showed improved numbers, even though marginally, indicating that PNB’s may be a one-off case.
Thursday’s trade would be a crucial one to watch because it is also the day when weekly contracts expire. Given the fact that not many investors are holding short positions, it would be worthwhile to find out whether Bulls would be keen to roll over their positions, or conversely, Bears would get some relief.
An important issue to watch would be the market breadth. It has been positive for many days. If on the day of contract expiry it stays positive, Bulls would continue to see the sun shine on them.
(Shilpa Nagpal is an analyst at Market Wizards Securities Pvt Ltd)