Headline indices, the Sensex and the Nifty 50, ended in the positive territory for the second consecutive session on Thursday, 30 July, thanks to support from select heavyweights, including Reliance, HDFC Bank, and Mahindra and Mahindra, while the mid and small-cap segments faltered after the US Fed kept interest rates unchanged but signalled rate hikes could start as early as September.
The Sensex rose 274 points, or 0.35%, to end at 77,928, while the Nifty 50 settled at 24,317, up 67 points, or 0.28%. However, the Nifty Midcap 100 index slipped 0.35%, and the Smallcap 100 index ended 0.56% lower.
The advance-decline ratio tilted in favour of decliners as more than 2,500 stocks declined on the BSE compared to nearly 1,700 advancers.
What moved the markets today?
The benchmarks rose on buying in select heavyweights, while the mid and small-cap segments witnessed profit booking after the US Federal Reserve’s status quo on interest rates.
Expectations are rising that the central bank may raise rates in September as the ongoing Middle East conflict has raised inflation risks. Three out of 12 policymakers voted in favour of a rate hike on 29 July, reflecting the building pressure on the Fed to act on inflation.
On the geopolitical front, the US-Iran war has escalated further, keeping oil prices at elevated levels and weighing on market sentiment. Jordan’s air defences shot down five missiles launched from Iran Thursday morning, hours after the U.S. military announced it had completed “a heavy wave of strikes against Iran” in response to an earlier Iranian missile attack on a US base in Jordan.
Brent crude traded above $91 per barrel when the Sensex closed.
The Indian rupee, meanwhile, climbed 9 paise to settle at 95.67 per dollar, according to provisional figures.
Rising US bond yields emerge as a fresh headwind
US 30-year bond yields hit a 2007 high of 5.239%, while the benchmark 10-year bond yield climbed by 9 bps to 4.71 on Thursday, after the Federal Reserve kept interest rates steady.
The yields on 10-year and 30-year bonds look set for their biggest monthly jump since March this year.
Rising bond yields are negative for emerging markets like India, as higher yields may prompt foreign investors to sell riskier emerging market equities and invest in safer debt instruments back home.
“A sharp uptick in US bond yields signalled growing pressure for a possible rate hike in the near future, keeping global investors on edge, while renewed crude oil volatility amid West Asian tensions added to external uncertainty. As a result, domestic equities stayed range-bound with sharp intraday swings, as investors weighed global headwinds against resilient domestic fundamentals,” Vinod Nair, Head of Research, Geojit Investments, noted.
Top Nifty gainers and losers
Mahindra and Mahindra, Coal India, and Eicher Motors ended as the top gainers in the Nifty index, while Adani Ports and Special Economic Zone, HDFC Life Insurance Company, and Shriram Finance ended as the top laggards in the Nifty index.
Sectoral indices today
Nifty Auto clocked a strong gain of 1.63%, as healthy Q1 numbers attract investors’ attention. On the other hand, Nifty Realty crashed 2% on profit booking.
Bank Nifty slipped 0.10%, and the Financial Services index also ended lower by 0.14%.
Nifty’s technical outlook
Ajit Mishra, SVP- Research at Religare Broking, pointed out that the Nifty is encountering resistance near 24,400, which coincides with the 200-day EMA.
“While the broader recovery structure remains intact above the 24,100-24,000 support zone, the inability to sustain at higher levels suggests the possibility of a consolidation phase, before an extension towards the 24,600–24,800 zone in the near term,” said Mishra.
Nandish Shah, Deputy Vice President at HDFC Securities, highlighted that from last Friday’s low of 23,606, the index has rallied 737 points and remains firmly above the 20, 50 and 100-day EMAs, underscoring a strong uptrend.
“A sustained move above 24,368 could open the path toward the next resistance at 24,530, while the 24,040–24,140 band is expected to act as support on declines,” said Shah.
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