SEBI Directive Sparks Market Surge: Indian Stocks Rally Amid Early Volatility

In recent days, the mood in the Indian stock market has been cautious, particularly concerning small and mid-cap shares, which have been experiencing higher valuations than their actual worth. The regulatory authority of the stock market, SEBI, has recently emphasized the need for more information regarding the risks associated with funds that are invested in small and mid-cap shares. 

This cautionary advice to fund managers and investors comes amidst widespread concerns about overvaluation. Just yesterday, the Indian stock market witnessed a sharp correction in share prices across the board, as funds noted new lows for the fourth consecutive day this week, reflecting a market grappling with overvaluation concerns.

Foreign Portfolio Investors Drive Momentum in Indian Stock Market

Today, sentiment in the Indian stock market tilted positively towards small and mid-cap shares as local institutional investors continued their relentless buying spree while foreign portfolio investors (FPIs) surged their investments in the Indian stock market. Momentum gathered pace in frontline services, power, commodities, metals, and industrial shares, along with notable movements in Reliance Industries, ICICI Bank, Mahindra & Mahindra, State Bank of India, Infosys Ltd., and HCL Technologies. 

The Indian stock market commenced with a two-sided fervor but eventually closed with a firm grip on gains, reflecting an upbeat mood driven by the strategic moves of both domestic and foreign investors.

Market Update: BSE Sensex and Nifty Futures

The BSE Sensex closed around the 72,500 mark, recording a notable gain of 195 points, while the Nifty Futures settled at approximately 21,985 points, up by 62 points. Bank Nifty Futures, on the other hand, ended around 46,119 points, witnessing a rise of 267 points. Mid-cap and small-cap indices on the BSE rose by 0.84% and 0.50%, respectively. 

Among various sectoral indices, healthcare shares saw selling pressure on the BSE, while other sectors remained buoyant. Out of the 3,909 scripts traded on the BSE, 1,895 witnessed declines, 1,900 recorded advances, and 114 stocks remained unchanged. Moreover, while only 2 stocks hit the lower circuit, 10 stocks hit the upper circuit, indicating mixed trading sentiments in the market.

Market Performance: Sensex and Nifty Indices

In the BSE Sensex, IndusInd Bank surged by 1.81%, Mahindra & Mahindra by 1.73%, Asian Paints by 1.13%, Nestle India by 1.12%, and Power Grid Corporation of India by 1.07%. Conversely, Tata Motors declined by 0.73%, TCS by 0.59%, Bharti Airtel by 0.57%, ITC by 0.51%, and Hindustan Unilever by 0.42%. With indices-based Sensex and Nifty witnessing gains, mid-cap and small-cap shares also performed well. 

The aggregated market capitalization of listed companies on the BSE increased by Rs. 2.00 lakh crore, reaching Rs. 387.95 lakh crore. Among the 30 companies listed on the S&P BSE Sensex, 22 companies saw gains while 8 experienced losses.

Nifty Futures Technical Levels

Nifty Futures Close: 22,181

For the upcoming trading sessions, potential Nifty Futures levels are as follows: the first significant support is at 22,088 points, while the most critical support level lies around 22,008 points. 

In terms of resistance, trading context suggests that Nifty Futures might encounter resistance in the range between 22,202 points and 22,272 points, with 22,303 points marking a particularly crucial resistance level. Traders are advised to exercise caution around the 22,008 points level and consider positioning themselves prudently.

Bank Nifty Futures Technical Levels

Bank Nifty Futures Close: 46,613

For the upcoming trading sessions, potential Bank Nifty Futures levels are as follows: the first significant support is at 46,880 points, while the most critical support level lies around 47,007 points. 

In terms of resistance, trading context suggests that Bank Nifty Futures might encounter resistance in the range between 46,570 points and 46,474 points, with 46,404 points marking a particularly crucial resistance level. Traders are advised to exercise caution around the 47,007 points level and consider positioning themselves prudently.

Specific Technical Levels for Futures Stocks

BalKrishna Industries (2243): The shares of this leading tire and rubber products group are currently trading around Rs. 2208. For those buying with a stop-loss at Rs. 2188, there’s a possibility that the stock may touch levels between Rs. 2260 and Rs. 2272 in the short term. Attention should be paid if the stock rises above Rs. 2280.

Bharti Airtel (1132): With a face value of Rs. 5, this stock, with strong fundamentals, is trading around Rs. 1103. Investors considering buying with a stop-loss around Rs. 1103 should note that this stock in the telecommunications – cellular and fixed line services sector might see upward movement between Rs. 1144 and Rs. 1150.

Godrej Properties (2411): According to technical charts, this stock in the residential and commercial projects sector is trading around Rs. 2463 and might target levels between Rs. 2397 and Rs. 2388. Keep an eye on the stop-loss at Rs. 2470.

Mahindra & Mahindra (1947): With an overbought position around Rs. 1980, investors selling with a stop-loss at Rs. 2002 might observe levels between Rs. 1919 and Rs. 1909. Pay attention if the stock rises above Rs. 2018.

Market Outlook: Friends, various reports suggest that the country’s economic growth rate has been forecasted to be above 7% in the current financial year, and it is anticipated to continue in the coming years. However, concerns about global economy slowdown, along with cautious bidding by foreign investors in global equity markets, are evident. In the last decade, Indian equity markets have witnessed net selling by foreign investors for seven years out of ten. The reduction in interest rates by the American Federal Reserve and the weak global economy led to aggressive selling in global equity markets in 2023. 

So far in 2024, foreign investors have continued to sell in the Indian equity markets. Domestic institutional investors’ participation in the market has increased significantly in recent times, indicating a strong position of domestic investors. However, uncertainties in the movements of foreign investors may have adverse effects on India’s forex reserves and equity markets. Therefore, caution is advised for every move in the Indian stock market in the coming days.