Daily Big Picture – Banking Stocks Boost Benchmark Indices to a Solid Start

MarketSmith India_William Oneil IndiaToday’s Action:

Benchmark indices begin the week with good gains. The Nifty Midcap index manages to record a decent gain, while the Nifty Smallcap index slips into the negative zone at the last hour.

Daily Market Review

The benchmark indices started off the week on a positive note as the Sensex and the Nifty recorded significant gains to scale fresh closing highs. Banking stocks led today’s rally after State Bank of India slashed savings bank interest rate to 3.5%, earlier today. However, the overall market movement was constrained by pharma and FMCG stocks.

The Nifty opened higher today at 10,020.05. After touching an intraday low of 10,018.75, the index advanced as the day progressed, touching an intraday high of 10,085.30 and finally settling at 10,077.10, up 0.63% from yesterday’s closing price. Similarly, the BSE Sensex, after opening higher at 32,412.20, touched an intraday low of 32,349.52. However, the index picked up steam in the second half, reaching an intraday high of 32,543.08. The Sensex finally settled at 32,514.94, up 205 points or 0.63% from yesterday’s close.

However, the market breadth, indicating the overall health of the market, was tilted towards the losers, with 892 stocks declining on the NSE, compared with 786 stocks advancing, and 291 stocks remaining unchanged.

Mixed trading scenario was observed in the broader markets as the Nifty Midcap index posted a decent gain of 0.25%, while the Nifty Smallcap index ended the day flat at -0.03%.

The MarketSmith India IND 47 Index, which lists the top 47 stocks in chart on fundamental characteristics, put on a similar performance as the key indices, gaining 0.68% in today’s trading session.

Among the sectoral indices, excepting the Nifty Pharma, FMCG, and Media indices, which lost 2.03%, 1.11%, and 0.20%, respectively, all indices made gains. The Nifty PSU Bank, Metal, and Energy indices led the gainers, advancing 3.62%, 1.65%, and 1.25%, respectively.

In the stock news, State Bank of India made a big move by introducing a 2-tier savings bank interest rate structure. The country’s largest public sector bank announced a cut in savings bank interest rate from 4% to 3.5% on account balances lower than INR 1 crore. Balances above INR 1 crore will continue to earn 4% interest. This decision came in light of declining inflation rate and the high interest rates. The announcement came just ahead of the commencement of RBI bi-monthly monetary policy review meeting, due tomorrow.

Trading volume on the Nifty and the Sensex was significantly higher today, compared to Friday’s session. Today, the Sensex dropped a distribution day from its tally due to ageing. As a result, the index squared off the distribution day count to 2.0 after adding one distribution day, last Friday. The Nifty’s distribution day count remains at 1.0, within the comfort level. The Indian market continues to trade in a Confirmed Uptrend.

Current Outlook:

– Market environment conducive for new purchases, but remain selective.

– Focus on fundamentally strong stocks breaking out of strong technical patterns.

– Stay disciplined and exercise sound buy and sell rules.

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