Equity markets gained for the third day in a row; though last hour selling in banking and financials capped the gains. Nifty gained 55 points (+0.4%) to close at 14,874 while Sensex ended 84 points (+0.2%) higher to end at 49,746.
Broader markets outperformed with Nifty MidCap 100/Nifty Smallcap gaining +0.5%/+1.2% respectively. Majority of the sectors ended in green with Metals gaining the maximum - up 3.9%, followed by IT (+1.2%). Infra and Realty gained 0.8% to 0.9% while Auto, FMCG, and Media were up less than +0.5%. Banks and Financials on the other hand, ended in red - down -0.6%/-0.3%, followed by Energy (-0.3%) while Pharma ended flat. India VIX was up 0.3% to 20.3 levels.
Global markets were mixed after Fed's commentary reinforced that the central bank plans to maintain its policy support despite massive fiscal spending from the recent government stimulus package.
On Domestic front, Nifty opened positive, extended its gains for the day but witnessed selling pressure in last one hour of the trade to close marginally higher. Metals clearly led the rally amid firm global cues and steady rise in the metal prices. Hot-rolled coil prices in China are up 28% YTDCY21; while they rose 116% in the past 12 months. JSW Steel was the top Nifty gainer - up 9.2%, after crude steel production rose 6% in Q4FY21. Even Cement continued its positive momentum while sugar and Fertilizer witnessed buying interest.
Commenting on the market outlook, Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said, "Technically, Nifty formed a Doji candle and continues its formation of higher lows from the last three sessions. Now, it has to decisively hold above 14880 zone to witness a range breakout and an up move towards 15000 and 15100 zones while on the downside support exists at 14750 and 14650 levels."
"Going ahead, Indian markets are likely to track global cues along with the earnings season which would kick start from next week and would keep markets volatile. Lot of stock specific action is likely to be witnessed due to this," he added.
Khemka expects Q4 to be another strong quarter, aided by a deflated base of 4QFY20 and healthy demand recovery for the large part of 4QFY21 - as attested by high-frequency indicators. "Performance is expected to be healthy despite headwinds of commodity cost inflation in various sectors. However, concerns over the fast spreading 2nd wave of Covid in India continues to remain."
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