Indian stock markets end higher on robust economic data
11:09, 1 December 2021
Indian equity indices ended higher on Wednesday boosted by a slew of economic data that assuaged pandemic woes and restored risk appetite.
IndusInd Bank topped the list of gainers among the index constituents with a 5.7% rise to INR933.65 followed by JSW Steel, which reversed a sharp fall earlier this week to close 4.7% higher at INR637.2 today. Drug major Cipla fell the most among the indices with a 4.4% weakness followed by rival Divi Labs which dropped 2.6%.
The National Stock Exchange’s 50-share Nifty50 index ended 1.08% higher at 17,166.9 points, while the S&P BSE 30-share Sensex advanced 1.09% to close at 57,684.7 points. The advance-decline ratio – a popular tool in measuring the breadth of the broad market – on the NSE stood at 1,094-746.
“After the sharp sell-off in the global markets yesterday, Indian equities reversed its course following recovery in global markets and strong domestic GDP data. India’s Q2 GDP (second-quarter gross domestic product) recorded a growth of 8.4% as economic activity moved towards normalcy after the impact of the second wave,” said Vinod Nair, head of research at Geojit Financial Services in Mumbai.
“Though the Fed chair’s comment on speeding up the pace of the bond-buying taper plan kept investors cautious along with the concerns of Omicron, the global markets recovered sharply today,” Nair added.
Data-driven markets
Investor sentiment got the biggest boost after macroeconomic data indicated that growth reached pre-Covid levels and recovery was broad-based across various sectors.
India, Asia’s third-largest economy, expanded 8.4% year-on-year in the three months ended September, compared with the contraction of 7.4% in the same period last year. The median of estimates made by five economists viewed by Capital.com had predicted the GDP growth at 8.3%.
A spending spree by the citizens helped the federal government clock the second-highest tax collection in any month in November, since it was introduced in July 2017. The mop-up was INR1.3trn ($173bn) from the goods and services tax in November, according to data announced by the government today.
Fiscal deficit at 36.3% of estimate
The federal government said that its fiscal deficit for the April-October period stood at INR5.47trn or only 36.3% of the estimate. The deficit as a percentage of GDP was at a four-year low due to buoyant revenue growth which outpaced the rise in expenditure during the fiscal year.
The improved sentiment helped the size of equities, or market capitalisation, on the Bombay Stock Exchange to increase by INR2.17trn to INR259trn, according to information on the bourses.
“On the technical front, the key resistance levels for Nifty50 are 17,230 followed by 17,480. On the downside, 16,840 followed by 16,680 can act as strong support. Key resistance and support levels for Bank Nifty are 36,470 and 35,230, respectively,” said Mohit Nigam, head of portfolio management services at Hem Securities.
All but one out of the 11 sectoral indices ended in the positive zone led by the PSU Bank index which advanced 2.7% and the Nifty Metals index, a basket of 15 company stocks, rising 2.3% today. The pharma index was the only one to end in negative territory with a 1.6% fall.
Bears at play
Investors still remain cautious about the developments over the spread of the newest coronavirus variant Omnicron.
“Global markets are still rattling in fear due to the new Covid variant and it may continue in near future. At the same time, favourable domestic data may result in some intermediate relief but the possibility of any major directional move seems unlikely. Keeping all in mind, it’s prudent to stay cautious and wait for further clarity,” said Ajit Mishra, vice president of research at Religare Broking.
“Nifty has closed below its 100-ema for three consecutive sessions for the first time since Oct’20, suggesting that the structural bull market of the last 14 months has now come to a halt. Alongside, multiple major sectoral indices geared to domestic consumption – Banknifty, Nifty Auto and Nifty FMCG – have also closed near their respective 200-ema,” said S Hariharan, head-sales trading, Emkay Global Financial Services.
“Given oversold conditions and seasonality associated with foreign institutional investor flows in December, there is a likelihood of near-term bottom formation. Nevertheless, any break of averages on these major sectors would herald a fresh wave to the downside, and Nifty has next major technical support at 16,200, should that situation materialise,” he added.