Sensex rises over 300 points, Nifty near 24,000 as US bonds yields slightly ease. Why is caution still warranted?

Sensex rose over 300 points, reaching 76,900 on its weekly expiry day, while Nifty 50 gained over 83 points to begin the session near 23,998 on Thursday. Broader markets also opened in the green, with Nifty Midcap 100 and Nifty Smallcap 100 gaining up to 0.5%.

The market sentiment is likely to look up today following the slight easing of the US bond yields, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. He noted that a big positive from the rupee perspective is the huge mobilisation of $136 billion under concessional swap facility. The $127 billion mobilised under the FCNR(B) scheme has come way above the consensus estimates. The implication of this from the market perspective is that the rupee will stabilise, imparting confidence to FIIs, according to the analyst.

What lies ahead for Dalal Street?

Despite the renewed optimism, caution is still warranted. US bond yields continue to remain elevated, with the benchmark US 10-year bond yield close to 5%. Oil prices continue to remain above $95 per barrel as uncertainty over US-Iran conflict continues to spook investors.

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With improving growth and earnings prospects, FIIs are likely to continue buying in India, despite the elevated US bond yields, Vijayakumar however said. He added that the huge FCNR(B) mobilisation by banks will help improve their NIMs. This is positive for banking stocks.
“An interesting feature of yesterday’s market decline is that the 141 point dip in Nifty happened despite a Rs 9,500 crores of institutional buying, with FIIs buy figure of Rs 6,688 crores and DII buy figure of Rs 2,812 crores. So, it is obvious that the brunt of the selling came from retail investors, proprietary traders and bears who used the market weakness to hammer the stocks down. This is likely to reverse today,” according to the analyst.Technical view on Nifty

Anand James, Chief Market Strategist at Geojit Investments, said Nifty’s swing higher from 23,800, supports hopes of a push higher, but he is not confident of chasing prices higher either.

The analyst said that the favoured view requires a break above 24,150-24,215 region to signal strength. Downside marker has been placed near 23,860.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)