The Indian stock market has witnessed a remarkable surge, with the Sensex and Nifty experiencing substantial gains. This surge has caught the attention of investors, analysts, and the general public, as it signifies positive economic growth and investor confidence in the Indian market.
The Indian equities, namely Sensex and Nifty, experienced a notable boost amidst investor concerns regarding ongoing debt ceiling negotiations in the US, the resilience of the banking sector, and the geopolitical situation in Europe.
- Advertisement -
This surge in the stock market can be attributed to the recovery of banking and financial stocks, which experienced significant selling pressure on May 5, primarily due to the decline of HDFC Bank and HDFC Ltd. The decline in the US dollar has been a significant element in driving up the Sensex, Nifty, Bank Nifty, and other broad market indices.
The Dollar Index has steadily fallen since the US Federal Reserve adopted a dovish stance on interest rate hikes. This trend has spurred buying interest from foreign institutional investors (FIIs) in emerging markets, including the Indian stock market.
- Advertisement -
The positive correlation between the Indian and US markets becomes evident when examining the performance of the US Dollar Index (DXY) chart. The DXY chart reflects the value of the US dollar against major currencies. A decline in the DXY chart often leads to an upswing in global equity markets, including India.
This is because a weaker US dollar enhances the attractiveness of Indian equities to international investors, strengthening their purchasing power and making Indian exports relatively more affordable. Given the expected continued weakness in the US dollar in the near term, stock market investors are advised to consider banking, automobile, capital goods, and real estate stocks, as these segments are primarily driven by domestic factors.
- Advertisement -
According to the Economic Times, Indian equity benchmarks concluded on a positive note, with a gain of approximately 1.5%. The key indices, namely Sensex and Nifty, successfully reclaimed their critical levels of 62,500 and 18,450, respectively, just ahead of the release of significant gross domestic product (GDP) data scheduled for the following week. In the near term, Nifty is expected to trade within a range of 18,660 to 18,393. Notably, 43 stocks in the Nifty 50 index yielded positive returns for investors during the week.
Among the top gainers in the index, Divi’s Laboratories secured the leading position with an impressive gain of 13.3%. ITC followed this at 5.7%, Adani Ports at 5.6%, Sun Pharma at 4.8%, and Tech Mahindra at 4%. Other notable gainers include Wipro, HCL Technologies, SBI Life Insurance, and Infosys, all advancing by over three percent. Conversely, Housing Development Finance Corporation, HDFC Bank, and Grasim Industries experienced declines of 2.3%, 1.9%, and 1.6%, respectively.
- Advertisement -
Across various sectors, significant weekly gains were observed. The BSE Information Technology index recorded the highest surge of 3.7%. The BSE Healthcare and BSE Fast Moving Consumer Goods indices followed closely with increases of 3.3% and 3.1%, respectively. The Realty, Power, Oil & Gas, and Auto sectors also witnessed jumps of over 2% during the week.
Anticipations are high for India’s FY23 GDP to surpass the previously projected growth rate of 7.0%, a development that would enhance the overall outlook of the Indian economy. In the short term, the market outlook is deemed robust, with crucial levels at 18,350/62,000 serving as decisive factors for the prevailing trend.
- Advertisement -
A movement above these levels could propel the index towards 18,600/62,800 and potentially extend even further to 18,680/63,000. On the contrary, if the index drops below 18,350/62,000, traders may opt to exit their long positions.
Overall, the Indian equity market showcased positive momentum, with several sectors and stocks delivering notable returns while others experienced minor setbacks.