Indian Stock Market Continues Bullish Trend Amid Positive Macro Factors
On March 19, the Indian stock market maintained its upward trajectory for the third consecutive session, buoyed by robust performances from financial stocks, major players, and renewed interest in undervalued shares. Despite some cautious sentiment on Wall Street ahead of a pivotal announcement from the U.S. Federal Reserve, Indian markets displayed remarkable resilience, underpinned by favorable macroeconomic indicators.
Sector Performance Highlights
Most major sector indices closed positively, with the notable exception of the IT and Fast-Moving Consumer Goods (FMCG) sectors. The metals sector, in particular, attracted significant attention following the 12% safeguard duty recommended by the Directorate General of Trade Remedies (DGTR) on specific steel imports aimed at reducing foreign imports.
- Nifty 50 surged by 0.32%, reaching a three-week high of 22,907 points.
- Sensex also saw a gain of 0.22%, concluding at 75,468 points.
- The broader market outshone benchmark indices for the second day, with the Nifty Midcap 100 climbing 2.63% to 50,817 points and the Nifty Smallcap 100 increasing by 2.43%, finishing at 15,747 points.
Defence Stocks on the Rise
The PSU defence sector gained notable momentum, with companies like Garden Reach Shipbuilders, Mazagon Dock, and Bharat Dynamics witnessing rallies of up to 20%. This surge was fueled by renewed interest in the sector, spurred on by a potential bilateral trade deal between India and the U.S. and increased defence spending from Germany.
Focus on U.S. Federal Reserve
Market participants are keeping a close eye on the U.S. Federal Reserve, which is expected to announce its latest policy decisions today. Analysts anticipate that the Fed will maintain current interest rates while providing updated economic projections. With escalating global trade tensions, investors expect a more cautious approach from the Fed, particularly in light of rising domestic prices due to new tariffs on key imports.
Sectoral Insights: Realty Shines, IT Falters
Among the 13 major sector indices, 11 ended the day positively, with Nifty Realty leading the charge with a 2.80% increase. Other sectors such as Nifty PSU Bank, Consumer Durables, Metals, Media, and Oil & Gas also saw gains ranging from 1% to 2%.
Conversely, the Nifty IT sector struggled, experiencing a 1% decline that ended its two-day winning streak. A report from Citi expressed a cautious outlook on domestic tech firms, citing concerns about the U.S. economic landscape.
- Despite the recent drop, the Nifty IT index is still trading at a 30% premium compared to the Nifty 50, despite growth rates lagging behind pre-COVID levels.
Market Comments from Experts
Vinod Nair, Head of Research at Geojit Financial Services, remarked, “The domestic market’s positive trend reflects justified corrections in valuations. The sustainability of this rally hinges on a revival in core fundamentals. Metal stocks, in particular, have gained traction following the government’s decision on steel import taxation.”
Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates, noted the technical outlook for the Nifty. “The index found support around 22,800, forming a small green candle on the daily chart, indicating underlying strength. Immediate support levels are at 22,800 and 22,700, while resistance lies around 23,000. Traders are encouraged to adopt a ‘buy on dips’ strategy in the near term,” he advised.
Conclusion
As investors digest the implications of the Fed’s policy announcement and navigate the evolving economic landscape, the Indian stock market remains vibrant, showcasing resilience amidst global uncertainties. With sectors like real estate and metals gaining momentum, the outlook appears cautiously optimistic.
