Sensex, Nifty close with gains; MSCI’s FOL change lifts sentiment despite weaker global cues

Domestic benchmark indices, after a weak start to the day’s trade, ended the session with gains. S&P BSE Sensex closed 376 points higher at 40,522 mark while the 50-stock Nifty ended just below the 11,900 mark. Broader markets, except smallcap indices, were seen outperforming the benchmark indices. Kotak Mahindra Bank was the top index gainer, registering over 12% gains. Sensex and Nifty inched higher today despite weaker global cues that saw S&P 500 fall the most in over a month. Analysts believe US Presidential elections are bound to keep stocks volatile. 

Global cues: Stock markets in the United States had ended lower on Monday. Among Asian peers, Shanghai Composite was up marginally and so was KOSDAQ. “Shares slipped in Asia on Tuesday due to surging coronavirus cases and waning hopes for U.S. economic stimulus. Data out of Asia was mixed with South Korea’s relatively strong showing which reflected a better than expected 1.9% economic growth in the last quarter, following a 3.2% quarterly decline in April-June,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

Broader markets outperform: Broader markets outperformed the benchmark indices during the day’s trade. Nifty Next 50 was up 1.46% Nifty Midcap 50 gained 1.31% and Nifty 500 was up 1.02%. Meanwhile the benchmark Nifty 50 was up 1%.

MSCI helps lift sentiment: MSCI on Tuesday morning announced that it would implement the change in FOL in various Indian securities on November 30, helping lift the market sentiment. “”Forecast of higher FII inflows to India, based on MSCI report, by raising investment limits helped the market to strongly outperform despite a weak global market. The sustenance of such a trend is low given increasing concerns over worsening spread of virus in western world which has weakened their markets for further correction,” said Vinod Nair, Head of Research at Geojit Financial Services.

Banking stocks surge: Kotak Mahindra Bank stocks gained 12% during the day but other banking stocks too were seen inching higher. S&P BSE Bankex zoomed 3.53% while BSE Finance was up 1.8%. On the NSE, Nifty Private Bank index jumped 3.14%and Nifty Bank surged 2.88%.

Technical take: “After going below the crucial support of 11750 in early hours of trade, the Nifty swiftly flew past the 11850 levels and closed above it. The index needs to cross 11900-11950 in order to generate early buy signals and thereafter we can expect the index to achieve 12200-12300. Breaking of 11700 would indicate a fresh wave of ‘sells’ which could drive the index down to 11400-11450,” said Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.