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Bulls dominated the market on Tuesday as benchmark indices rallied through the day, with Nifty topping the 16,000-mark. The BSE Sensex is closed near the 54,000-mark, as buying interests revived in large-cap stocks.
After opening on a strong note amid mixed global cues, the market rallied further, led by FMCG, IT and Pharma. Substantial gains in financials further supported the market rally in the second half while metals remained under pressure. Gains in heavyweights such as HDFC also helped the market.
The Nifty 50 surpassed the 16,000-mark for the first time, recording a fresh all-time high of 16,146.90. It closed at a new high of 16,130.75, up 245.60 points or 1.55 per cent. After recording an all-time high of 53,887.98, the BSE Sensex closed at record 53,823.36, up 872.73 points or 1.65 per cent.
As Sensex hit record highs, the overall market capitalisation of BSE stocks surged over ₹240 lakh crore.
Breadth remains positive
The market breadth remained positive, with 1,740 stocks advancing, 1,505 declining and 131 stocks remaining unchanged on the BSE. While 520 stocks hit an upper circuit, 209 were locked in the lower circuit. As many as 538 stocks touched 52-week high level, and 13 touched a 52-week low.
Corporate earnings, positive economic data trigger shift to large caps
Sneha Poddar, AVP – Research, Broking & Distribution, Motilal Oswal Financial Services, said, “Nifty today finally managed to break its two-month-long consolidation to touch the most awaited level of 16K. It had shown strong resilience since the start of June, moved in a very narrow range despite weak global cues, and finally managed to leap towards the 16,000 zone.”
According to Poddar, Q1-FY22 earnings, which began on a healthy note, supported the market.
“It helped the market to largely sail through the headwinds of a possible third Covid wave, commodity led inflation and volatility around the US Fed taper talk. Management commentaries across the board suggest an improved demand environment post-June 21, led by the easing of restrictions, lower active Covid-19 cases, and a pickup in vaccinations. We estimate corporate earnings to continue to recover, as the underlying economy opens up, with progressively higher vaccination trends, thus offering many bottom-up opportunities,” said Poddar.
According to Arun Malhotra, Founder & CIO, CapGrow Capital Advisors LLP, "Markets are buoyant, and the large caps have started moving up. The majority of the buoyancy in the last three months has been witnessed in small and midcaps that are due for a correction. The Q1FY22 results have been descent and will keep the market steady. A shift from small cap to large caps seems to be the trade right now."
Titan, HDFC, IndusInd Bank, Nestle India and Ultratech Cement were the top gainers on the Nifty 50, while JSW Steel, Shree Cements, Bajaj Auto, UPL and Tata Steel were the top laggards.
Binod Modi, Head Strategy at Reliance Securities, said, “Domestic equities extended gains and recorded fresh highs with benchmark Nifty finally breaching 16,000 psychological marks. Notably, a sharp rebound in heavyweight financials supported the market’s rally. Additionally, sustained recovery in Auto, consumer, and IT aided indices.”
“Notably, key economic indicators like GST collection, auto sales volume and other high-frequency indicators like e-way bills indicate a strong rebound in July, which bodes well and indicates sustained healthy corporate earnings in subsequent quarters,” added Modi.
Metals lose shine
On the sectoral front, a majority of indices closed in the green.
Nifty FMCG led the rally, ending 1.73 per cent higher. Nifty Bank was up 1.43 per cent at closing, while Nifty Financial Services was up 1.68 per cent. Nifty Auto was up 1.56 per cent, while Nifty IT was up 1.18 per cent. Nifty Pharma was up 1.19 per cent.
Meanwhile, Nifty Metal ended flat, down 0.05 per cent.
Midcap, smallcap stocks under pressure
While benchmarks rallied, broader indices faced pressure amid profit booking.
Nifty Midcap 50 ended flat while Nifty Smallcap 50 was down 0.15 per cent at closing. The S&P BSE Midcap was up 0.19 per cent at the close, while the S&P BSE Smallcap was up 0.23 per cent.
The volatility index rose 7.36 per cent to 13.75.
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