Political Stability Boosts Indian Market Recovery with Broad-Based Buying

At the close, the Nifty 50 was at 22,620.35 up by 3.36%

The NSE Nifty 50 index displayed a robust start on June 5, rising by 3.36% and closing above the 22,600 mark. This rebound follows a significant downturn in the previous session, where the Indian equity market experienced its worst day in over four years, plunging around 6%. However, investors regained confidence as two crucial allies expressed support for forming a new government with the BJP, fostering expectations of political stability and continuity under Prime Minister Narendra Modi’s leadership for a third term.

Political Stability Boosts Market Confidence
The resurgence in the Indian market was underpinned by broad-based buying across various sectors. Investors welcomed the assurance of political stability, although attention remains focused on the government formation process and the upcoming RBI policy meeting. Market analysts anticipate no changes in the RBI’s policy stance, considering persistent high food inflation and the anticipation of increased government spending, which has fueled notable traction in FMCG stocks.

Broad-Based Buying and Sectoral Gains
The Indian market’s robust recovery was driven by broad-based buying across various sectors. Political stability appears assured, boosting investor confidence. Market participants are also focusing on the upcoming RBI policy meeting, where no change in policy stance is expected due to persistent high food inflation and anticipated government spending increases. This has particularly benefited FMCG stocks, reflecting notable traction in the sector.

Smart Rebound Reflects Investor Sentiment
Equity markets staged a smart recovery on Wednesday, driven by increased prospects of the BJP-led National Democratic Alliance (NDA) forming the next government. Nifty’s strong recovery, marked by a gap-up opening of 240 points and a subsequent bullish reversal, underscores investor optimism amidst evolving political dynamics and economic expectations.

Bank Nifty: Up by 4.53%

On the trading day, the Bank Nifty opened on a positive note, registering a notable gain of 4.53% and concluding the session in the green, closing at 49,054.60. Similarly, the BSE Sensex witnessed a significant uptrend, advancing by 3.20% and ending the day in positive territory at 74,382.24.

In the sectorial front, the metal sector experienced a remarkable surge, rising by an impressive 5.75%. Leading the charge was the National Aluminium Company Ltd., which saw its shares climb by a staggering 10.69%. Hindustan Copper Ltd. followed closely, posting a substantial increase of 8.20%. The Steel Authority of India Ltd. also contributed significantly to this bullish trend, with its stock appreciating by 7.63%.

Foreign Institutional Investors (FII/FPI) were net sellers in the market. The buy value amounted to Rs. 21,012.72 crore, while the sale value stood notably higher at Rs. 26,668.98 crore, resulting in a net value of -Rs. 5,656.26 crore.

Contrarily, Domestic Institutional Investors (DII) exhibited a different trend, with net buying activity observed. The buy value for DIIs totaled Rs. 28,615.23 crore, while the sale value amounted to Rs. 24,060.15 crore, resulting in a net value of Rs. 4,555.08 crore.

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

The gainers included Federal Bank with a 7.40% increase, Bandhan Bank with a 7.31% increase, IndusInd Bank with a 7.06% increase, IDFC First Bank with a 6.27% increase, and AU Bank with a 6.08% increase.

Conversely, there were no losers today in the Bank Nifty. These outcomes indicate that all banking stocks performed well throughout the day.

Rupee Recovers Amid Strong Equities and Lower Oil Prices

The rupee rebounded by 14 paise, closing at 83.37 against the US dollar on Wednesday. This recovery was driven by strong buying in domestic equities and a dip in crude oil prices internationally. However, gains were capped by the rising US dollar and fresh foreign fund outflows.

At the interbank forex market, the rupee opened at 83.50, hitting an intra-day high of 83.28 before settling at 83.37, marking a gain from the previous close.

Previous Day’s Decline and Market Dynamics
On Tuesday, the rupee had plunged by 37 paise, ending at 83.51 against the dollar. The domestic currency’s appreciation on Wednesday was aided by a partial recovery in local markets and possible intervention by the Reserve Bank of India (RBI). Despite this, the rupee faces ongoing pressure from the US dollar’s recovery and lackluster macroeconomic data, suggesting a slight negative bias moving forward.

Meanwhile, the dollar index, which measures the greenback against six major currencies, rose by 0.23% to 104.29. Brent crude futures, the global oil benchmark, showed a marginal increase of 0.06%, reaching USD 77.57 per barrel. These factors continue to influence the rupee’s performance in the forex market.

Stocks Highlights

Adani Ports & Special Economic Zone Ltd. saw its share price rise by 7.29%, moving from Rs 1,248.95 to Rs 1,340.00. The company recently declared a dividend of Rs 6.0 per share, with the record date set for June 14, 2024. For the fiscal year ending March 31, 2024, Adani Ports allocated 10.65% of its operating revenues to interest expenses and 7.1% to employee costs.

However, a bearish trend emerged with a 50-day moving average crossover, historically leading to an average price decline of -4.64% within 30 days over the past five years. Despite this, the stock has delivered a three-year return of 49.78%, outperforming the Nifty 100’s 42.61% return.

Larsen & Toubro Ltd.’s share price experienced a slight dip of -0.10%, closing at Rs 3,399.95 from its previous Rs 3,403.20. The company announced a Rs 28.0 per share dividend, with a record date of June 20, 2024. For the year ending March 31, 2024, the firm spent 1.91% of its operating revenues on interest expenses and 7.02% on employee costs.

Similar to Adani Ports, Larsen & Toubro faced a bearish signal with a 50-day moving average crossover, indicating an average price decline of -3.46% within 30 days in the last five years. Nonetheless, the stock achieved a remarkable three-year return of 121.34%, significantly surpassing the Nifty 100’s 42.61% return.

Advance Decline Ratio

Today, the advance-decline ratio was 2.70, and the market breadth was positive. The volatility index India Vix decreased by 29.39 to settle at 18.89 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1913
Decliners – 709
52Wk High – 69
52Wk Low – 89
High Band Hitters – 74
Low Band Hitters – 267
200d SMA – 21095
50d SMA – 22424
20d SMA – 22504

Top Gainers and Losers Stocks

The top gainers were Adani Ports (+7.29%), IndusInd Bank (+7.06%), Hindalco (+6.46%), Tata Steel (+6.32%), and M&M (+6.06%).

The top losers were Larsen & Toubro (-0.10%), BPCL (-0.03%).

Top Gainers and Losers Sectors

The top gainers sector were Metal (+5.75%), Auto (+4.70%), FMCG (+4.34%), Financial Services (+4.15%), and Media (+3.96%).

SECTORS – NOTABLE ACTION
METAL +5.75%
AUTO +4.70%
FMCG +4.34%

Stocks Ban List

(SEBI) F&O ban list (ZEEL open at -143.75 and close at +146.30) are not currently on the stock exchange.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

SAIL stock has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 22000 to 23000 is the Nifty 50 trading range.

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This article is only for educational purposes and is not an investment advice.