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Below is the Daily Market Commentary 06th September 2021 by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services

Benchmark indices opened gap up and touched another new high during the day. Both Nifty/Sensex traded sideways in a narrow range throughout the session and finally closed with gains of 54/167 points – up (+0.3% each) at 17,378/58,297 levels. The broader market followed the suit and outperformed with both nifty midcap 100/ nifty smallcap 100 closing with gains of +0.4%/+1%. Among sectors, IT, Media and Realty indices rose 1-3%, followed by consumer durables, Auto and Metals up 0.4-0.7%. While selling was seen in the bank, power, financial service, pharma and oil & gas stocks.  The volatility index, India VIX zoomed 3.9% at 15.11 levels.

Global markets rallied aided by strong German industrial orders while the disappointing U.S. non-farm payrolls data pointed to a delay in Federal Reserve monetary policy tightening. Further, talks of more stimulus in Japan and China boosted the market sentiments. However, Crude prices traded sharply lower after Saudi Arabia, cut its prices for Asian buyers over the weekend, suggesting an uncertain demand outlook. Indian equities extended its gains for third consecutive day, amid a firm global market and gains in I.T. & realty stocks. Reliance surges to record high with the market cap rising up to ~Rs 16.75 lakh cr. Metals stocks were in focus as Shanghai Stainless Steel Futures surged 7% while hot-rolled Coil and steel Rebar were up 2% each. Nalco hits the level of Rs 100/sh for the 1st time since April 2011 as Shanghai’s Aluminium contracts were up 3% today. Political turmoil and supply disruptions in Guinea (world’s largest bauxite reserves) is likely to push up alumina prices going ahead. Realty stocks were among top gainers as demand continues to soar, especially for mid-income housing. On stock specific front, Wipro, HCL Tech, INFY, Reliance and Hindalco were top gainners. While IOC, Indusind Bank, ONGC, Britannia and Kotak Bank were top losers. IndiaMART, IRCTC, Escorts, IEX, Polycab, MCX were some of the top midcap gainers.

Globally, all eyes will be on European Central Bank, which will holds its policy meeting this week and is expected to shed some light on the stimulus tapering, following good economic recovery seen recently. Going ahead the positive momentum is likely to sustain as the sentiments remains quite constructive, supported by improving economic data and positive earnings expectation.  Strong liquidity and positive global cues are also likely to support domestic markets to continue their movements to record levels. The consumer demand will be closely monitored as its expected to pick up given the festive season beginning from next month and the restrictions continuing to ease. However concerns on the third wave of the pandemic still hovers. Further valuations are also moving beyond comfort zones and hence could lead to bouts of profit booking and increase in volatility. Large caps offer better margin of safety in the current environment and could continue to remain in focus in the near term as well.

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