India’s stock benchmarks jumped over 1% on Monday, led by gains in bank shares after ICICI Bank’s better-than-expected fourth-quarter results. Analysts said the market may be on course to scale records though the spike in the Volatility Index or VIX, a fear gauge, shows that traders see risks to equities at current levels. The outcome of the US Federal Reserve’s rate-setting meeting on Wednesday is expected to determine the direction of equities in the foreseeable future.
The NSE Nifty rose 223.45 points, or 1%, to close at 22,643.4 on Monday. The BSE Sensex rose 941.12 points, or 1.28%, to end at 74,671.28. Sandeep Raina, executive vice president, research, Nuvama Professional Clients Group, stated that they think the market is looking healthy and the direction will be determined by the corporate results in the next 20-30 days.
The Nifty is currently 132 points, or 0.6%, away from its all-time high of 22,775.7. The Sensex is 453 points, or 0.6%, short of its record of 75,124. Analysts said the Nifty is nearing a crucial level, beyond which it could hit a new record. Mehul Kothari, deputy vice president, technical research, Anand Rathi Shares and Stock Brokers, mentioned that a follow-up move above 22,655 might pull the index towards an all-time high. Kothari added that the sentiment along with price action and placement of oscillators remain in favor of bulls for the time being. However, the only concern over Monday’s rally was that it was stock-centric.
Bank shares were among the top gainers with Bank Nifty shooting up 2.5%. ICICI Bank and IndusInd Bank gained 4.4% and 4%, respectively, while AU Small Finance Bank soared 7.5%. Banks and financials have the highest weight on the Nifty at 34%. Out of 1,200 points gained in the Nifty Bank index, more than 800 were contributed by ICICI Bank, HDFC Bank, and State Bank of India (SBI). Out of the 220-point gain in the Nifty, about 150 came from these stocks and Axis Bank. The VIX jumped 12% to 12.24 on Monday, indicating caution among traders.
Sneha Poddar, associate vice president, equity research, Motilal Oswal Financial Services, said that the VIX may have moved up in response to the Fed meeting, which is a major event, along with Bank Nifty expiry on Tuesday, driving up volatility in the market. While the Fed is expected to keep interest rates steady at the end of the two-day meeting on Wednesday, the central bank’s comments on when it plans to start cutting rates will be of greater interest to the market.
