Heavyweights lift benchmarks; Sensex less than 1% away from all-time high- QHN

The Sensex and the Nifty rose for a second consecutive session on Monday, boosted by buying in index heavyweights, such as Reliance Industries, ICICI Bank, and Axis Bank. Auto stocks led by Mahindra & Mahindra extended gains following strong May sales.

The benchmark Sensex rose 240 points, or 0.4 per cent, to end the session at 62,787; the Nifty gained 60 points, or 0.32 per cent, to finish at 18,594. The 30-share Sensex is now 497 points, or 0.78 per cent, away from its all-time closing high of 63,284 made on December 1.

Global markets were muted amid hopes the US Federal Reserve will pause rate hikes in June even as economic data provided conflicting signals. The non-farm payrolls in May in the US rose to 339,000, even as unemployment climbed to 3.7 per cent while wage growth slowed.

The unemployment rate surge in the US was the biggest one-month increase since April 2020. 

“Fed policymakers reconvene for their next meeting on June 16. The market is currently pricing only a 30 per cent chance of a rate increase at the meeting, with the view that the Fed would prefer to skip a meeting before tightening further. We wonder how the Fed will keep its credibility if it doesn’t stay the course and raise rates further in June. Since the US central bank’s last board meeting, core inflation has surged above expectations, and the number of jobs created in the past two months has been 40 per cent above market expectations,” said Gary Dugan, CIO of Dalma Capital.

The Brent crude rose 1.3 per cent and was trading at $77.12 per barrel (8.50 pm IST) after Saudi Arabia pledged to cut supply. The kingdom’s output will decline to 9 million barrels per day from around 10 million barrels in May, Saudi’s energy ministry said in a statement. It planned further voluntary output cuts which will be implemented from July.

Shares of oil marketing companies fell close to a per cent, while oil producer ONGC gained 0.5 per cent, while RIL gained 0.9 per cent.

The market breadth was strong, with 2,128 stocks gaining and 1,543 declining. Half of the Sensex stocks gained. According to provisional data from exchanges, foreign portfolio investors were net sellers to the tune of Rs 701 crore but domestic institutional investors net bought shares worth nearly Rs 1,200 crore.

“Traders should continue with a stock-specific trading approach and utilise intermediate dips or pauses to accumulate quality stocks. Apart from the key sectors, one can selectively look at mid-caps and small-caps, citing their prevailing outperformance,” said Ajit Mishra, SVP-Technical Research, Religare Broking.