Stock markets erase early losses as key indices jump nearly 1% on strong buying

The auto and financial indices are down half a percent each while buying is seen in oil & gas and metal names

FPJ Web DeskUpdated: Thursday, June 02, 2022, 04:39 PM IST
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In the broader markets, the BSE MidCap and SmallCap indices opened flat. / Representative image |

After two consecutive days of losses, the benchmarket indices surged on June 2. The indices were trading in the positive after two consecutive days of loss. Among the sectors, the IT and oil and gas indices is over a percent each while the smallcap index gained 0.5 percent.

Strong buying was witnessed in Oil & Gas, IT, and Metal scrips. Among heavy-weights Reliance Industries, HCL Tech and Bajaj Finserv exhibited a smart performance, said Mohit Nigam, Head-PMS, Hem Securities. Traders took support after bank credit to NBFCs grew in double digit in FY22 with outstanding bank credit to them rising by 10.4 per cent to Rs 10.5 lakh crore on the back of improvement in overall economic activities and banks' renewed focus on the NBFC sector improvement in their balance sheets.

The Sensex was up 339.88 points or 0.61 percent at 55,721. Nifty was up 89.70 points or 0.54 percent at 16,612.45. About 1,885 shares have advanced, 1384 shares declined, and 132 shares are unchanged.

Sector wise, airline industry remained in focused, as prices of aviation turbine fuel (ATF) has been reduced by Rs 1,563.97 per kilolitre, or 1.27 percent, to Rs 1,21,475.74 per kl (Rs 121 per litre) in the national capital on softening international crude oil rates. Simultaneously, prices of commercial LPG were reduced by Rs 135 per 19-kg cylinder.

Markets bounce back after a negative start

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said, After a subdued start, markets bounced back sharply on the back of renewed optimism as investors lapped up shares of the recently beaten down IT and oil and gas stocks. In fact, Indian shares outperformed other Asian peers, which mostly ended in the red.

Technically, after a muted opening, the Nifty took support near 16,450 and reversed the trend. A promising reversal formation on intraday charts and a long bullish candle on daily charts is indicating further uptrend from the current levels. For day traders, 16,550 would act as a trend decider level, above which the Nifty could rally till 16,720. In case of any further upside, the index could rally up to 16,800. On the flip side, below 16,550, uptrend would be vulnerable and could falter up to 16,450.

Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, Dalal Street rose sharply in today’s trade shrugging off weak overnight Wall Street cues amid value buying backed by short covering in Reliance Industries and other IT stocks. Nifty bulls’ probably will rip to its 200 - DMA 17,253 mark. The index's immediate target is seen at 17,837. Nifty has immediate support at 16,421-16171, while resistance is seen at 16,837-17,264.

The markets made a negative start tracking weakness across global markets amid concerns that latest economic data might do nothing to push the Fed off track from its aggressive interest rate hiking cycle. Though, soon markets trimmed most of their losses and traded flat with positive bias in early deals. In late afternoon, bourses were trading at day high ahead of weekly F&O expiry and hence ended the day with handsome gains, added Nigam.

On the technical front, the key resistance levels for Nifty50 are 16700 and on the downside 16400 can act as strong support. Key resistance and support levels for Bank Nifty are 36200 and 35000 respectively, adds Nigam.

Asian markets trade in red

On the global front, Asian markets were trading mostly in red as traders grew increasingly worried that central bank moves to rein in inflation could tip economies into recession.

Japan's benchmark Nikkei 225 lost 0.2 percent to finish at 27,413.88. Australia's S&P/ASX 200 shed 0.8 percent to 7,175.90. South Korea's Kospi slipped 1.0 percent to 2,658.99. Hong Kong's Hang Seng dipped 1.0 percent to 21,082.13, while the Shanghai Composite reversed earlier losses, gaining 0.4 percent to 3,195.46.

European markets were trading in green led by industrial and luxury names, with gains limited by a slide in energy stocks and lingering worries over slowing economic growth.

Global shares mixed

World shares were mixed Thursday, with European benchmarks opening higher after a broad decline in Asia.

Crude prices fell

Oil prices fell by more than $2 a barrel ahead of a meeting of OPEC set for later in the day. Oil-producing nations are expected to decide on output targets in their first meeting since Europe set sanctions on Russian crude.

The Financial Times reported Saudi Arabia has indicated to western allies it could raise production to cover any substantial fall in Russian production.

Supply bottlenecks would persist, Jeffrey Halley of Oanda said in a commentary, "but it would be a rare piece of good news for the global economy and the inflation fight''.

Benchmark US crude lost $2.56 to $112.70 a barrel. Oil prices rose 0.5 percent to settle at $115.26 on Wednesday. Brent crude, the international standard, shed $2.66 to $113.63 a barrel.

Rupee slips 10 paise

The rupee depreciated by 10 paise to close at 77.60 (provisional) against the US dollar on Thursday, even as oil prices eased and domestic equities settled on a positive note.

At the interbank foreign exchange market, the rupee consolidated in a narrow range. It opened lower at 77.61 against the greenback and finally settled at 77.60, down 10 paise over its previous close.

During the session, the rupee touched an intra-day low of 77.63 and a high of 77.54.

On Wednesday, the rupee had recovered from its record low to close 21 paise higher at 77.50.

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