India's Stock Indices Post Best Monthly Gains in 20 Months

Strategic Insights -

India's stock indices saw a surge in Friday's trading session, with the Nifty and Sensex ending 1.35% and 1.25% higher, respectively. This helped the benchmarks post their best monthly gains in 20 months. Analysts are now eyeing the Reserve Bank of India's policy meeting next week, as the market participants believe there is room for the indices to rise by another 2% from current levels.

Key Takeaways:

  • The Nifty ended 228.65 points or 1.35% higher at 17,158.25 on Friday, while the Sensex ended 712.46 points or 1.25% up at 57,570.25.
  • Foreign investors were net buyers of Indian shares worth Rs 1,046.32 crore on Friday, taking their total purchase tally for July to Rs 8,348 crore.
  • Analysts expect the Nifty to head higher to 17,300, with some calling the recent surge a technical rally following a period when market sentiment had become extremely bearish.
  • The Nifty and Sensex also recorded their best monthly gain in July since November 2020, with the indices gaining 8.7% and 8.6%, respectively.
  • US Fed chair Jerome Powell's commentary on Wednesday that the pace of rate tightening could slow if prices ease gave more legs to the market rally.
  • Jefferies' global strategist Chris Wood said in his newsletter Greed & Fear, "There is no doubt that financial markets, in the midst of the silly season, have been in an awful hurry to price in the peaking out of inflation and the end of Fed tightening."
  • Gautam Shroff, MD and head, institutional client group at Edelweiss, said, "What cheered the market was (US Fed Chair) Powell's dovish commentary, which indicated that frontloading of hikes is done and the Fed no longer believes it's behind the curve."
  • Rohit Srivastava, founder, Indiacharts.com, said, "We expect the Nifty to touch 17,300 and closing above that will indicate whether the Nifty will head to 17,800."

Statistics:

  • The Nifty gained 8.7% in July, its best monthly gain since November 2020.
  • The Sensex gained 8.6% in July, its best monthly gain since November 2020.
  • Foreign investors have been net sellers of Indian shares for nine months, selling Rs 2.49 lakh crore since October 1, 2021.
  • US Fed Chair Jerome Powell's dovish commentary on Wednesday was a major factor in the market rally.
  • The Nifty closed above 17,000 for the first time in nearly two months.

Sources:

  • "Our Bureau" (Financial Express)
  • Jefferies' newsletter Greed & Fear (Chris Wood)
  • Edelweiss (Gautam Shroff)
  • Indiacharts.com (Rohit Srivastava)