Nifty 50 continues march, but bulls seem to be losing steam

The upward march of the Nifty 50 continued for the 13th consecutive session as the index hit its fresh record on Monday, despite weak global cues.

The Nifty remained in the green on gains led by shares of select heavyweights such as ITC, Bajaj Finance, Infosys, Reliance, and HCL Tech.

However, gains were capped amid weak global cues. Major European markets, such as the UK's FTSE, France's CAC and Germany's DAX, were in the red when the Nifty 50 closed. Among the Asian peers, Hang Seng and Shanghai Composite Index fell up to 2 percent, while Kospi and Nikkei ended with mild gains.

All eyes on US micro data

The market's focus is now on US macro data, including the US jobs report this week, which will influence expectations about the US Fed rate cut this month. At the current juncture, the market has fairly discounted a 25 bps rate cut.

The Nifty 50 and the Sensex hit their fresh record highs of 25,333.65 and 82,725.28, respectively, during the session. The Nifty 50 finally closed 43 points, or 0.17 percent, higher at 25,278.70, with shares of Bajaj Finserv, Bajaj Finance and HCL Tech as the top gainers.

The Sensex closed 194 points, or 0.24 percent, higher at 82,559.84. Gains were not broad-based as the mid- and small-cap indices ended lower. The BSE Mid-cap Index slipped 0.03 percent, while the Small-cap Index closed with a loss of 0.47 percent.

Bulls losing steam?

“While key indices continued to be in a record-breaking spree on the back of selective buying in frontline stocks, several sectoral indices ended in red indicating that the bulls are beginning to lose steam. Investors would wait for the outcome of the key US jobs data to be released on Friday which will be key for interest rate decisions by the US Fed in the current month,” said Prashanth Tapse of Mehta Equities.

Over 330 stocks, including TCS, Infosys, ITC, HCL Tech, Persistent Systems, Bharti Airtel, Bajaj Finserv, Bajaj Auto, Sun Pharma, Lupin, Cipla and Divi's Labs, hit their fresh 52-week highs in intraday trade on BSE.

Due to mild gains in the Sensex and losses in the mid- and small-cap segments, the overall market capitalisation (M-cap) of the firms listed on the BSE saw a nominal rise to nearly ₹464.87 lakh crore from nearly ₹464.40 lakh crore in the previous session.

Among the sectoral indices, BSE Telecom (down 1.65 percent), Metal (down 1.18 percent), and Industrials (down 0.82 percent) lost significantly.

On the NSE, Nifty Bank closed 0.17 percent higher, while the PSU Bank and Private Bank indices rose 0.51 percent and 0.25 percent respectively.

"Markets are gradually inching higher each day, buoyed by favourable global cues and rotational buying in heavyweight stocks. However, the ongoing underperformance of banking majors continues to dampen sentiment. Given this scenario, we recommend aligning trades with the prevailing trend and seeking buying opportunities on market dips," said Ajit Mishra of Religare Broking.

As the Nifty 50 has been rising for the l13 sessions, experts see chances of a consolidation, which will be healthy for the market and offer investors the opportunity to initiate fresh longs.

Heavy call writing

According to Rupak De of LKP Securities, the Nifty 50 failed to surpass the opening high after a positive start.

"Heavy call writing was observed at the 25,300 strike, and overall, call writers significantly outnumbered put writers throughout the day. In the near term, the trend might remain sideways to negative as long as it stays below 25,300. On the lower end, however, the correction may be limited to 25,000, where significant put writing has been observed," said Mr De.

"On the upside, we expect the Nifty 50 to target levels of 25,500. On the downside, the crucial support base is placed at 25,210 – 25,120 is the crucial support base where the key hourly moving averages are placed," said Jatin Gedia of  Sharekhan by BNP Paribas.

                                                   (By arrangement with livemint.com)