On Monday, the Indian stock market witnessed a strong rally, with both benchmark indices rising significantly, contributing to a surge of nearly Rs 3 lakh crore in investor wealth. This was primarily driven by gains in the banking, metal, and real estate sectors. The S&P BSE Sensex climbed by 498.58 points, closing at a new level of 78,540.17, while the NSE Nifty50 advanced by 165.95 points, ending the day at 23,753.45.
Several factors contributed to the upbeat mood in the market, especially the outcomes of the recent GST Council meeting. The decision not to hike taxes on tobacco-related products resulted in a sharp uptick in ITC stocks, which surged by 2.12%. This news was a positive surprise for the market, as there had been expectations that the council might increase taxes on tobacco items, which would have had an adverse effect on companies like ITC. On the other hand, insurance stocks were among the losers of the day after the GST Council decided to defer the decision on reducing the GST on life and health insurance plans, which had been a much-anticipated measure.
The auto sector, however, was not as fortunate, with stocks of several major automakers coming under pressure after the GST Council announced an 18% GST on used and old vehicles, including electric vehicles (EVs), sold by registered sellers. This move raised concerns about the potential impact on sales in the second-hand and EV markets, which have been growing in recent years.
In terms of stock movements, several key players in the market recorded substantial gains. JSW Steel, which has been a leader in the metal sector, rose by 2.36%. Similarly, ITC surged by 2.12%, benefitting from the favorable GST decision. Hindalco saw an increase of 1.87%, continuing its strong performance in the metals space. Trent, a leading player in the retail sector, advanced by 1.73%, while HDFC Bank, one of the largest private-sector banks, saw a rise of 1.72%.
On the flip side, there were a few notable losers in the market. Hero MotoCorp, one of the leading motorcycle manufacturers, saw a decline of 1.50%, as investors reacted to the broader market trends and concerns over the auto sector’s performance. Maruti Suzuki, a major player in the Indian car market, fell by 0.84%, while Honeywell Automation saw a dip of 0.55%. Insurance stocks also saw some selling pressure, with HDFC Life falling 0.53% and Bajaj Finserv declining by 0.43% after the GST decision on insurance was postponed.
In terms of sectoral performance, real estate stocks were the star performers, as the sector benefitted from positive sentiment and expectations of continued growth. PSU banks also saw strong performance, with BankNifty making significant gains on the back of positive developments in the banking sector. However, some sectors faced selling pressure, with media stocks underperforming and the auto sector struggling due to the GST announcement. Broader markets also saw mixed movements, with small-cap stocks ending in the red, though mid-cap stocks were largely steady and showed resilience.
From a technical perspective, the Nifty index formed a doji candlestick pattern, which indicates indecision in the market and a potential reversal. The Nifty continued to trade below its crucial 200-day exponential moving average (EMA), signaling that the bearish sentiment may continue in the short term. According to market experts, the support for Nifty is expected to lie between 23,510 and 23,400, with resistance expected to be at 23,940 and 24,000 in the next trading session.
In terms of trading strategies, VLA Ambala, Co-Founder of Stock Market Today, recommended a "sell-on-rise" strategy, suggesting that investors should consider booking profits on rallies. This cautious approach is likely to be beneficial for those looking to navigate the current volatility, with the broader market remaining susceptible to both global and domestic uncertainties. The near-term outlook for the market remains uncertain, and investors are advised to keep an eye on key technical indicators and any further developments from the upcoming GST Council meetings or other macroeconomic events.
