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Benchmark indices extended the rally to the third day on Friday, tracking positive global cues. On a weekly basis, BSE Sensex and NSE Nifty gained nearly three per cent each this week amid receding fears of inflation. Analysts are bullish on the Indian market given fall in commodity prices that fuelled inflation in recent times. Thanks to good monsoon, Reliance Securities, in fact, expect Nifty to hit 19,000 by the end of FY23.
On Friday, the 30-share BSE Sensex advanced 303.38 points or 0.56 per cent to close at 54,481.84, while the broader NSE Nifty gained 87.70 points or 0.54 per cent to end at 16,220.60.
Within the Sensex pack, Larsen & Toubro, Power Grid, NTPC, ICICI Bank, Axis Bank, Dr Reddy's Lab, Nestle, Bharti Airtel, Infosys and Hindustan Unilever were the major gainers.
On the other hand, Tata Steel, Maruti Suzuki India, IndusInd Bank, TCS and Asian Paints were among the laggards.
Broader market
Similar to the benchmark indices, the mid-cap and small-cap stocks gained on Friday. While the BSE Midcap gained 0.2 per cent, BSE SmallCap jumped 0.3 per cent.
Amid buoyancy, volatility index fell 4.21 per cent to close at 18.40.
Foreign institutional investors (FIIs) remained net sellers on Friday, offloading shares worth ₹109 crore, as per exchange data.
Cooling commodity prices
According to Joseph Thomas, Head of Research, Emkay Wealth Management, the rally in the equity market is attributed to the expectation that central banks may go slow on rate hikes after taking into account the latest drop in commodity prices.
"However, the actual inflation numbers will be released in the US and India in the coming week, and this number would be crucial in deciding the trajectory of the markets,” he added.
According to Palak Kothari, Senior Technical Analyst, Choice Broking, the options data indicate upside for the Nifty. According to him, open interest was concentrated 16200-strike and 16,500-strike on the call side. On the put side, open position was high at 16000-strike.
Monsoon magic
In its latest report, Reliance Securities said the Nifty is projected to touch the 19,000-level or an upside of 18 per cent over the current level in FY23 on the back of favourable monsoon this year.
"As per our observation of past 6-7 years, monsoon has played a key role in economic revival and demand recovery across segments over past several years in Indian economy. Entire spectrum of consumption gets booster from rural economy with incremental growth coming from rural India," Mitul Shah, Head of Research, Reliance Securities said in a statement.
He further said the importance of a favourable monsoon is high in current challenging situation of high food inflation and demand weakness.
"Complete turnaround of monsoon deficit over past 8-10 days has been supportive for markets and sentiments. From a monsoon deficit of more than 20 per cent during mid of June to current surplus of 0.3 per cent indicates likely recovery in Kharif sowing and agri output going ahead," he added.
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