Markets Peak Record Highs, Tata Group Stocks Tumble Post NCLT Ruling

Mumbai, December 18: Equity markets on Wednesday closed higher for the second day in a row, ahead of the GST Council meeting later in the day. Both the Sensex and Nifty surged to new high and closed with gains of 0.5 per cent each at 41,559 and 12,222 levels. However, broader markets underperformed the benchmarks with Nifty mid-cap and Nifty small-cap were down 0.3 per cent and 0.1 per cent respectively. All the sectors closed in green except PSU banks and media. Pharma index was the top gainer with gains of 1.2 per cent, followed by metals.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said, “Market sentiments continue to be positive on optimism that the initial US-China trade pact will allay one of the major risks to global economic growth. On the domestic front, market expects government measures to continue to revive demand.” Investors are awaiting GST Council meeting outcome which would influence the market in early trade on Thursday.

Khemka added that technically, Nifty took support around its Horizontal Trend line and rebounded piercingly. It continued to make higher highs – higher lows for fifth session and formed a positive candle on daily scale. Till the time, Nifty sustains above 12150, we may see an up move towards 12300 – 12350 levels. While major support for Nifty is now shifting higher towards 12050 – 12100 zone.

Nifty broke out to new all-time record close of 12,221.65 as positive cues from the global market and easing concerns fueling momentum with liquidity. The Santa Claus effect is seen developing in global markets ahead of Christmas. There was some divergence as bank Nifty underperformed Nifty on a relative basis but managed to make a new all-time high. It was heavyweights like HDFC Bank, M&M and Reliance post lunch added further strength.

The Tata Son's Cysus Mystry being reinstated did pull down the entire Tata group stocks and also the strength for index but the derivatives pointed at much higher levels. The strength in metals and pharma also added to positive sentiment.

Mustafa Nadeem, CEO, Epic Research, said, “This is a low volatility environment with momentum picking up which usually supports the trend in shape. We expect this trend to continue with minor corrections. 12,150 is now a strong base for this upside move which should act as a point of support for bulls.”

The derivative data point to long addition on 12,300 – 12,400 levels while lower strikes at 12,100 – 12,200 witnessed some selling due to weekly expiry. The range-bound movement can be seen due to weekly options expiry while the overall trend remains bullish. It is advised to be on the long side on any dips towards lower levels of 12,150 – 12,200 levels.

Markets would be reacting to any changes in GST Council meet on Wedensday while we may witness lower volumes due to Holidays and Year book closing in Western markets, Nadeem said.