Indian stocks higher on back of US economic data
12:40, 23 December 2021
Indian stocks ended higher for a third day as positive macroeconomic data from the US, the world’s largest economy, lifted market sentiment
The Bombay Stock Exchange’s 30-share Sensitive Index, or Sensex, ended 0.68% higher at 57,315.2 points from its previous close. The most-traded National Stock Exchange’s (NSE) Nifty50 index closed 0.69% stronger at 17,072.6 points.
“Domestic bourses continued to trade firmly, mirroring an upbeat mood in the global markets led by gains in realty, financials and software stocks, while broader markets strengthened,” said Vinod Nair, head of research at Geojit Financial Services.
“US third-quarter GDP expanded at an annualised 2.3%, which is higher than expected. Reports on reduced risk of hospitalisation and severity of Omicron as compared to the delta variant has supported the upward momentum, along with favourable US economic data.”
Positive territory
Nine out of India’s 11 sectoral indices ended in positive territory, with the Nifty Realty companies index gaining as much as 2.3% and the Nifty PSU Bank index gaining 1.56%. The NSE advance-decline share ratio – the number of advancing shares compared with the number of declining shares – was 1,366-727 today.
“Apart from software, we’re seeing select counters from pharma and consumer also doing well,” said Ajit Mishra, vice-president for research at Religare Broking.
“However, the underperformance of the banking pack remains the key concern. We believe a decisive move above 17,150 in Nifty and 35,500 in the banking index would trigger further rebound else profit taking would resume.”
Key shares
Stock in software and services giant Infosys advanced for a third day to reach a record high of INR1,860 before closing the day 1.7% higher at INR1,856.15. The stock has advanced more than 45% this year.
Shares in India’s largest mining company Vedanta advanced after the company said it aims to raise INR10bn via non-convertible debentures. The stock ended 0.7% higher at INR344.4.
Global money manager Morgan Stanley’s report reiterating an overweight stance on Jubilant Foodworks helped the stock price gain 2.9% to close at INR3,532.
Morgan Stanley raised the target price of the firm, which operates the Domino’s Pizza and Dunkin’ Donuts brands in India, to INR 5,000, which converts to a 47% rise from the close on 22 December.
Global economies
US gross domestic product accelerated at a 2.3% rate in the July-September quarter, the Commerce Department said. The pace slowed as Covid-19 infection cases soared despite a pick-up in overall economic activity.
Earlier today, local equities opened higher after Japan raised its growth projections for the next fiscal year starting in April. It said GDP growth would rise to a record 3.2% in the year ending March 2022 despite risks from the spread of Omicron and other economic constraints.
Global markets continued their pre-holiday rally on the back of renewed confidence in economic recovery, despite the surge in Omicron cases, according to Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.
He said the relief rally in Indian stocks today might continue for some time yet, while selling by foreign investors has reduced sharply over the past few days as they enter into the holiday mood.
New issues
Shares in MedPlus Health Services, the country’s second-largest pharmacy retailer, stood at INR1,040 on the NSE, a 30.65% premium over their issue price of INR 796.
The issue was oversubscribed by nearly 53 times when it opened on 13 December and the company raised a total of INR13.98bn. The stock closed 40.85% higher at INR1,121.15.
The IPO of CMS Info Systems initially saw a weak response from investors as it was only 80% subscribed until the final day of bidding. It received bids for 29.9 million equity shares against the plans to raise funds offering 37.5 million equity shares. The price band per INR10 face-value share was INR205-216.
However, the sale completed successfully on the third day and was nearly 18% oversubscribed by 2pm IST on 23 December, according to the Economic Times.
Outlook
“Markets are taking comfort from their global counterparts, but it will be difficult to extend the rebound amid the updates on rising Covid cases. Participants should continue with a cautious approach and maintain their focus on stock selection,” said Religare Broking’s Mishra.
The Nifty50 index is currently at the crucial hurdle of 17,150-17,200, according to Nagaraj Shetti, a research analyst at HDFC Securities.
“The negative chart pattern of lower tops and lower bottoms remains intact and the Nifty is now placed to form a new lower top of the sequence,” said Shetti.
“More often, trends get reversed and the gaps are filled soon after the third gap formation. Hence, the bulls need to be cautious at the higher levels.
“The short-term trend of the Nifty50 continues to be positive. But the market is currently placed at the crucial overhead resistance around 17,100-17,200 levels.”