Below is the Daily Market Commentary 29 May 2021 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd
Equity markets opened gap up with Nifty hitting an all-time high of 15469. Nifty posted record closing high of 15436 (98 points; +0.6% higher) largely led by Reliance Industries, which surged nearly 6% on the back of heavy volumes. On the other hand, Sensex is just few miles away from touching its new all-time high. It gained 308 points (+0.6%) to end at 51,423 respectively. The broader market however underperformed and ended in red with Nifty Midcap100/ Nifty Smallcap100 down -0.04%/+0.7% respectively. Majority of the sectors ended in green with Energy being the biggest gainer – up +1.4% followed by Infra (+1.2%). Banks, Financials, Auto, FMCG, and Metals ended with less than 0.5% gains while Realty ended flat. On the other hand, Pharma (-1.2%) was the biggest loser, followed by IT (-0.2%) and Media (-0.3%). India VIX fell down by 12.59% from 19.91 to 17.40 levels - which is at lowest levels of last 65 weeks since February 2020 along with its biggest single day drop since 25th November 2020. Falling VIX is likely to extend the bullish market momentum towards new high territory.
Global cues were positive as focus turned to a multi-trillion dollar spending boost by the Biden administration. Even hawkish comment from Bank of England official boosted market sentiment. On the domestic side, Nifty rose for the sixth straight day to close at record high of 15,469 – surpassing its previous peak of 15432 hit on 16th Feb. Steady decline in Covid-19 cases, announcement of unlocking in the national capital, and $6 trillion fiscal stimulus in the US held up investor confidence. India recorded its lowest daily count of new Covid-19 cases in 44 days - logged 186,364 fresh virus cases. Delhi CM announced that the national capital will begin to unlock from Monday and the construction activities and factories will be reopened from May 31. This marks as a first step towards a gradual uptick in economic activities
The overall structure of the market remains positive as fresh covid cases continue to decline and investors are upbeat about unlocking of economy in June which will help revive commercial activities. Many states are likely to follow the footsteps of Delhi and reopen their economy soon. Hopes of further stimulus by government is also bolstering investor confidence. Thus, as the 2nd Covid-19 wave continues to recede in India and pace of vaccination expected to pick up from next month, we expect the long term fundamentals to remain intact. Rising global inflation is a worry but is unlikely to hurt India, unless energy prices start picking up. Further various Central Banks have maintained their hawkish outlook. Next week RBI’s MPC would be key moniterable, where also the officials are expected to maintain their accommodative stance. On the other hand, US markets are shut on Monday due to Memorial day.
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