Tuesday morning’s trading in Indian stock indices was mostly affected by investors taking profits after gains. At the time this story was being written, both the Sensex and the Nifty were down roughly 0.4% each.
Strong fundamentals, such as a solid GDP outlook, moderate inflation, and robust foreign investor purchases, are advantageous for markets, though. The stock indices are very close to reaching record highs. Investor mood during the previous several days was bolstered by the US central bank’s most recent monetary policy position, which eventually paused the interest rate after raising it for more than a year. Meanwhile, Prime Minister Narendra Modi’s US visit and possible defence collaboration between the two countries have brought back focus to defence stocks in India.
Defence stocks have performed quite strong, in fact, many turned multi-bagger, over the past few years due to the government’s aggressive indigenous manufacturing push.
“Markets are shying away from the record high due to intermediate volatility in the banking majors. We recommend maintaining a positive tone and focusing on other key sectors like auto, FMCG, energy, and selectively in midcap & smallcap space for fresh longs,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.
Further, the Indian rupee has been exhibiting strength recently, supported by strong foreign fund inflows and favourable domestic macroeconomic data. Today, Rupee traded below 82 per US dollar. Indian equities avoided closing at record highs due to profit booking, which was mostly driven by private banks. According to Vinod Nair, Head of Research at Geojit Financial Services, “Global markets also took a pause after a strong gain last week as investors anticipated China’s rate decision and the Fed chair’s testimony.