Sensex, Nifty scale new highs yet again

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Strong buying in banking, finance, energy and IT heavyweights propelled Indian equity benchmarks to record highs yet again on December 9. The Sensex hit 46,164.10, while the Nifty touched 13,548.90 for the first time in intraday trade.

RBI cancelled the banking licence of Maharashtra based

The Sensex closed at 46,103.50, up 495 points, or 1.09 percent, and the Nifty was 136 points, or 1.02 percent, up at 13,529.10 at the closing. BSE Midcap and Smallcap indices closed 0.40 percent and 0.49 percent higher, respectively.

Over the weekend, Pfizer Inc sought emergency-use authorisation in India, followed by Astra Zeneca’s Covishield vaccine, which is being manufactured by the Pune-based Serum Institute of India. Media reports also said that Bharat Biotech, too, had sought emergency use nod for its Covaxin.

Sustained FII inflow

Foreign institutional investors (FIIs) have been on a buying spree in the Indian financial market.

They were net buyers in the equity market, worth more than $8 billion in November and about 50 percent of the money went to banking stocks followed by FMCG, pharma, and auto sector, Edelweiss Securities said in a report.

The low-interest-rate environment, globally, and risk-on trade are driving capital flows into emerging markets, including India. The recent adjustment in the MSCI Index also aided the sentiment.

Stimulus talks

Since the March lows, the market has been rising, boosted by liquidity infusion by the governments. Reports suggest that the Trump administration has proposed a second coronavirus relief package.

The US government had proposed a $916-billion relief package on December 8, a Reuters report said.

Positive Asian cues

Most Asian markets rose on December 9 as investors tracked positive news on COVID-19 vaccines and efforts to launch more fiscal stimulus. Japan’s Nikkei jumped over a percent while Korea’s Kospi gained about 2 percent.

Technicals

The Sensex Nifty has been rising constantly but market experts believe 13,450 – 13,500 is a key resistance zone.

As long as the Nifty sustains above 13,311, its lowest point on December 8, the upwards momentum is likely to continue and can take the index towards 13,550, experts said. Fresh exposure on the long side should be avoided.

“To be on the safer side, we are advocating booking profits in the ongoing rally. As far as levels are concerned, 13,450-13,500 continues to be a key resistance zone, whereas on the lower side, the crucial support base shifts at 13,300-13,250 now. A move below this support zone would result in an extended correction,” said Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking.

Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments, said the market is still in the middle of the resistance zone of 13,400-13,700.

“Regular booking of profits would be a prudent way of approaching the index. While the trend is bullish, traders must trade cautiously and upgrade to stop losses so as to conserve their profits. 13,100 is good support for this week,” he said.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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