Domestic equities rose for the third straight session on Monday amid positive global cues aided by a recovery in global bond markets and hopes that interest rates were near their peak. The Sensex surged 594 points or 0.92 per cent at 64,958 on Monday, while the Nifty settled at 19,411, up 0.94 per cent.

Nifty has gained 3 per cent from its bottom made near the 18840 zones last week on the back of positive global cues and healthy quarterly results.

Notable gainers

Divis Labs was the top Nifty50 stock, with gains of 4.7 per cent. Other top gainers include Hero Motocorp (2.5 per cent), Eicher Motors (2.4 per cent), L&T (2.2 per cent) and Axis Bank (2.1 per cent). The majority of the sectors ended in green on Monday, with Oil & Gas, Realty, Metals and Pharma the among top gainers. Cement stocks saw some action after companies reported strong Q2 earnings.

Global ratings agency Fitch raised India’s medium-term potential GDP growth estimates by 70 basis points from 5.5 per cent to 6.2 per cent.

“Optimism continued as soft US payroll data and expectations of moderation in monetary tightening by the Fed supported sentiment. Since most of the headwinds are global in nature, investor sentiment has shifted to domestic-oriented businesses, where festive demand is healthy,” said Vinod Nair, Head of Research at Geojit Financial Services.

The Federal Reserve’s rating-setting group agreed to hold key federal funds rate in a target range between 5.25-5.5 per cent last week. 10-year US treasury yields eased to 4.6 per cent, after climbing to 16-year highs recently.

“We expect market to remain positive over the next few days ahead of the Diwali festival over the weekend. Action could be seen in the broader market with niche segments in stronger momentum,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

Positive outlook

According to Nair, the spread of earnings in Q2 has been decent and brings more attention to capital goods, financials, and auto stocks. He expects the momentum to continue in the second half of the fiscal, with tailwinds on margins likely to moderate due to the recent uptick in commodity prices.

Asian shares advanced Monday, led by South Korea’s Kospi which gained 5.7 per cent after the country re-imposed a ban on short selling. European stocks were struggling for direction on Monday morning as investors chose to keep their powder dry following some strong gains last week.

A reasonable bull candle was formed on the daily chart with minor upper and lower shadow. This market action signals a decisive upside bounce in the market after the formation of important bottom reversal at 18837 levels on October 26.

“The immediate resistance of 18250 has been taken out sharply on the upside on Monday and the market is now advancing towards the next overhead resistance of around 19550-19600 levels in the short term. Immediate support is placed at 19320 levels,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

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