Stock market today: Nifty 50 snaps 3-day losing run; why did the Indian stock market rise today?

Stock market today: Powered by shares of select banking and FMCG heavyweights, including ICICI Bank, ITC, HDFC Bank, and Hindustan Unilever (HUL), Indian stock market benchmarks the Sensex and the Nifty 50 closed with healthy gains on Monday, September 9.

The Sensex closed at 81,560, up 376 points, or 0.46 per cent, while the Nifty 50 ended the day with a gain of 84 points, or 0.34 per cent, at 24,936.40.

While the benchmark indices ended higher, the midcap and small-cap segments suffered losses. The BSE Midcap index slipped 0.28 per cent, while the Smallcap index lost 0.65 per cent.

Domestic market benchmarks rose even as global cues were mixed. Investors' focus is now on the US inflation number, which will help them gauge the size of the Fed's rate cut next week.

The August US Consumer Price Index (CPI) is due on Wednesday, followed by the Producer Price Index (PPI) on Thursday. The US Fed monetary policy meeting is scheduled for September 17-18.

The market has discounted a 25 bps rate cut this time, but some experts believe the signs of a slowdown in the US economy may push the central bank to go for a bigger rate cut of about 50 bps.

According to a Reuters report quoting the CME FedWatch Tool, Fed funds futures traders are now pricing a 69 per cent chance of a 25-basis-point cut and a 31 per cent chance of a 50 bp reduction at the Fed's September 17-18 meeting.

"The market is currently attempting to gain stability between potential rate cuts and recession fears in the US. The current trend in the US job data suggests that the anticipated 25 bps rate cut may not be sufficient. Moreover, the upcoming data on US inflation and jobless claims will be decisive in assessing the market trend," said Vinod Nair, the head of research at Geojit Financial Services.

Why did the Indian stock market rise today?

A decent gain in the Indian stock market can be attributed to value buying in select heavyweight stocks following a recent correction, which offered some valuation comfort. With the medium to long-term outlook for the Indian stock market remaining strong—supported by sustained economic growth and the increasing influence of domestic investors—investors are selectively picking quality stocks for long-term gains.

Banking and financial heavyweights such as ICICI Bank, ITC, HUL, HDFC Bank and Kotak Mahindra Bank ended as the top contributors to the gains in the Nifty 50 index.

The Nifty FMCG index jumped 2.04 per cent, while the Nifty Bank index rose 1.07 per cent. Nifty Private Bank index moved 1.12 per cent higher, but the PSU Bank index dropped 0.20 per cent.

“Markets rebounded after 4-session losses due to buying in banking stocks. However, the undertone remained cautious as most sectoral stocks ended in red amid uncertainty over the US Fed rate cut later this month. Investors will be closely watching US inflation data to be announced later this week, which could provide more clarity on whether the Fed would undertake its first rate cut in the backdrop of slowing economy and weak jobs data,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.

The Nifty 50 saw 26 stocks end in the green. Shares of HUL (up 2.85 per cent), Shriram Finance (up 2.30 per cent), ICICI Bank (up 2.09 per cent), ITC (up 1.95 per cent) and Britannia (up 1.74 per cent) closed as the top gainers in the index.

On the other hand, shares of ONGC (down 2.91 per cent), Tech Mahindra (down 2.48 per cent), BPCL (down 1.19 per cent), Tata Steel (down 1.14 per cent) and Hindalco (down 1.06 per cent) closed as the top losers.

Nifty 50 technical view

Shrikant Chouhan, the head of equity research at Kotak Securities, pointed out that the Nifty 50 formed a small bullish candle on daily charts and a reversal formation on intraday charts, suggesting pullback formation is likely to continue in the near future.

"We believe as long as the market is trading above 20-day SMA (Simple Moving Average) or 24,800, the pullback formation is likely to continue. On the higher side, it could move up to 25,000 and 25,125. On the other side, below 24,800, the uptrend would be vulnerable. Below this level, traders may prefer to exit out from the trading long positions," said Chouhan.

According to Rupak De, Senior Technical Analyst at LKP Securities, the Nifty 50 remains a 'sell-on-rise' as long as it remains below 25,100.

"On the higher end, the 25,000-25,100 range may act as crucial near-term resistance, where sellers could re-enter. On the lower end, support is placed at 24,800-24,785, below which selling might increase," said De.

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