The current rally is a broad-based one as is evident from its spread: Along with the sensex, even BSE’s Midcap and Smallcap indices hit record intraday peaks on Thursday at 22,395 points and 24,138 levels, respectively. As a result investors’ wealth, measured by BSE’s market capitalisation too settled at a record peak at nearly Rs 229 lakh crore. The sensex, since scaling its all-time high level in mid-February, had touched an interim low at about 47,700 mark in the third week of April, but has since been on an northward journey, despite net selling by foreign funds and muted global cues in recent days.
According to Siddhartha Khemka of Motilal Oswal Financial Services, in recent days global cues were mixed as investors weighed inflation concerns ahead of key US economic data while oil prices rose to near one-anda-half year highs. “On the domestic side, Nifty, after two days of flat closing, scaled to new highs as consistent falls in daily Covid-19 cases, and a stronger rupee, kept market mood upbeat.” The sentiments were buoyant despite Services PMI contracting in May for the first time in eight months, Khemka wrote in a post-market note.
Dalal Street would be looking at the outcome of RBI’s policy meeting on Friday. The central bank’s main policy making body is expected to keep rates unchanged but may come out with some new measures to support the economy battered again by the Covid second wave in India. Investors, however, would be keenly watching what the RBI has to say about the inflation in the economy which has, in recent times, been sticky at an elevated level.
For the next few weeks investors will be closely watching how states lift Covidrelated restrictions which are in place now, how the vaccination drive of the government picks up pace and then how the economy tries to make a comeback. Technically, the Nifty is on course to scale the 16,000 level. “For the Nifty, 15,550/15,600 are the support levels. However, the resistance is close to 15,750/15,800. The 15,770/15,780 levels could be a big hurdle,” said Shrikant Chouhan, executive VP (equity technical research) at Kotak Securities.