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Gains in heavyweight financial stocks, coupled with positive global cues, helped the Indian equity benchmarks end Monday's session higher. The Sensex gained 344 points or 0.5 per cent to end the day at 62,846 points while the Nifty50 ended Monday at 18,608 points, gaining 109 points or 0.6 per cent.
With banking stocks leading the gains, the Bank Nifty hit a new high of 44,375 points, a gain of 357 points or 0.8 per cent. The index touched the new high after 166 days. Sandeep Gupta, head of dealing and advisory- broking & distribution, MOFSL, said that earnings momentum continued for banking stocks as most banks reported strong results.
"Apart from further expansion in margins, asset quality too continued to improve. Loan book growth has been healthy across segments, The index is witnessing a strong breakout and could see further momentum from hereon, and the index can now head towards 45000 to 46000 zones in the coming sessions,' said Gupta.
Meanwhile in the US, a deal between US President Joe Biden and House Speaker Kevin McCarthy to suspend the $31.4 trillion debt ceiling until January 2025 further boosted sentiments. The deal came after weeks of negotiations between Biden and the representatives of the Republican party. However, the deal needs the approval of a divided Congress before June 5 to prevent the US government from defaulting on its payments.
Analysts warned that even if the deal wins the approval of the US lawmakers, investors have to deal with a host of headwinds -- from the prospect of another interest-rate hike by the Federal Reserve (Fed) to liquidity issues.
Going forward, the statements of a bunch of Fed officials this week and economic data from China and the US will be keenly tracked.
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"Rotational buying across sectors would help the index maintain the positive tone and any intermediate dip due to global cues should be considered as a buying opportunity. We reiterate our preference for the leading sectors like banking, financials, auto and FMCG, and suggest staying selective in the others,' said Ajit Mishra, VP, technical research of Religare Broking.
Foreign portfolio investors continued to be strong buyers of Indian equities on Monday as they bought shares worth Rs 1,758 crore, according to provisional data from exchanges.
So far in May, they have bought shares worth Rs 39,106 crore, the best buying in nine months. The market breadth was strong, with 1,921 stocks gaining and 1,715 declining. Two-thirds of the Sensex stocks were in the green, with HDFC Bank and HDFC contributing the most to the 30-share index’s gains. The former rose 1.2 per cent while the latter 1.5 per cent.
