Mumbai After rising more than 1.5 percent in the previous trading session, the Indian stock market had a flat start on Wednesday amid mixed signals from global markets. While investors are assessing the positive signals related to the domestic market, challenges at the global level kept pressure on the market momentum.
BSE Sensex opened at 73,049.76 points, while on Tuesday it closed at 73,033.78 points. In this way, there was a slight increase of 15.98 points i.e. 0.02 percent in Sensex. On the other hand, Nifty 50 opened at 22,715.75 points, while in the previous trading session it had closed at 22,721.95 points. That means a slight decline of 6.20 points or 0.03 percent was recorded in Nifty.
Which stocks were under pressure?
In the Nifty 50 index, Shriram Finance, Bajaj Finance and BSE were among the biggest losers in early trade.
Talking about broader markets, the Nifty Small Cap 100 index recorded a decline of 0.15 percent. At the same time, Nifty Mid Cap index was down 0.33 percent.
IT sector booming, consumer durables weak
In sector-wise trading, Nifty IT continued its rise and was the best performing sector with a gain of over 1 per cent. After this, a rise of up to 0.38 percent was seen in Nifty Midsmall IT & Telecom and Nifty FMCG. Nifty Media and Nifty Private Bank were also seen trading in the green.
In contrast, Nifty Consumer Durables declined by 0.67 percent. Healthcare related indices also remained under pressure and recorded a decline of up to 0.6 percent. Nifty PSU Bank was also seen trading under pressure.
Tuesday's rise was due to short covering
According to market experts, the sharp rise in Nifty on Tuesday was unexpected in a weak and declining market. The main reason behind this was considered to be short covering activities.
According to experts, this rally was also supported by Finance Minister Nirmala Sitharaman's remarks in which she had said that the government will carefully review the views of stakeholders regarding Long Term Capital Gains (LTCG) Tax and Securities Transaction Tax (STT). These comments increased expectations of possible policy changes and strengthened investor sentiment.
Rupee also benefited from RBI's steps
Analysts said the recent steps taken by the Reserve Bank of India (RBI) to control speculation in the currency market have strengthened the rupee. The rupee has strengthened by about 1.5 percent in the last two trading sessions.
However, the US 10-year Treasury bond yield remains at around 5.2 per cent and the price of Brent crude is trading around $106 per barrel. Both these factors are being considered a big challenge for the stock market.
Analysts believe these global pressures could limit the sustainability of the current rally. Despite this, due to expectations of better results for the second quarter, financial, telecom, metals and automobile sectors may remain relatively strong.
Can Nifty reach 23,200?
According to technical analysts, the recent rise has again strengthened the expectations of Nifty reaching the level of 23,200. However, the index is now approaching a zone where further upside may be challenged.
Immediate support for Nifty is considered to be around 22,550. At the same time, the bullish trend can become stronger if there is a decisive gain above the barrier zone of 22,787 to 22,880.
Recovery in Asian markets also
Meanwhile, Asian markets also showed improvement after two consecutive sessions of decline. Investors are hopeful that the US Federal Reserve may adopt a less aggressive stance on increasing interest rates next year.
Traders are also assessing the potential impact on supplies due to developments involving Yemen's Iran-backed Houthi group and Saudi Arabia. Apart from this, investors are also keeping an eye on the possibility of increasing Russian diesel supply in the global markets.
Investors will also keep an eye on India's August wholesale price index (WPI) inflation data for further signals on the direction of the domestic market.
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