Dalal Street Corner: Softening crude, FIIs turning net buyers allow market to close on high note; what should investors do on Thursday?

Softening of crude oil prices and Foreign Institutional Investors (FIIs) turning net buyers after a long gap infused confidence among investors, helping the market to close with over one per cent gain on Wednesday. The FIIs bought to the tune of Rs 1,295.84 crore in the Indian market on Tuesday for the first time since May 30. 

Oil prices plummeted about 9% on Tuesday as global benchmark Brent crude settled at $102.77 a barrel, losing $10.73, or 9.5%, however, the prices rose around nearly 3% on Wednesday as  
Brent crude futures rose to $105.85 a barrel in early trade on Wednesday.  

In the market, the rally came from midcap stocks, while FMCG, Auto, Consumer Durables and Realty sectors too led the recovery.  

Nifty Midcap rose by 1.9% amid huge buying interest. Similarly, Nifty FMCG, Auto, Consumer Durables and Realty gained more than two per cent providing much needed support to the market.  

Furthermore, benchmark indices Nifty 50 and Sensex gained 1.13% and 1.16% to end at 15,989.80 and 53,750.97 respectively. The benchmarks were led by Bajaj twins, which gained nearly 5%, followed by Britannia, Hindustan Unilver, Eicher Motors, Maruti, Asian Paints and Titan.  

Meanwhile, the market breadth remained positive on Wednesday with 1827 stocks advancing and 1472 declining on the BSE. As many as 137 stocks remained neutral on Wednesday of the total 3436 stocks that traded on the exchange on Wednesday. 

As market closed near crucial 16000-mark on Wednesday, here is what experts make of today's session 

Vinod Nair, Head of Research at Geojit Financial Services. 

Softening crude oil prices, FIIs repositioning to net buyers and strong business data from lenders tempered optimism in domestic equities. Crude prices fell over recessionary fears, however, the fall has boosted the appetite for consumption, chemicals, logistics and OMCs as it will reduce the cost burden of these sectors" 

Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities. 

The Nifty bulls came back strong from the lower levels and ended the index on a high note. The index surpassed the level of 16,000 and closed near it, which indicates a continuation on the upside towards 16200 levels. The lower-end support stands at the 15,800 level and as long as this support is held the index remains in a buy mode. 

The Bank Nifty covered the entire previous day's losses and closed near the day's high indicating sharp short-covering throughout the day. The index is comparatively stronger than the Nifty index and continues to be in buy mode with strong support at the 33800 level. The index is likely to test the upside level of 35,000-35,500 on the upside which coincides with its 200DMA. 

Santosh Meena, Head of Research, Swastika Investmart Ltd. on Market 

Bulls are ready to take Nifty above the 16000 mark as there is selling exhaustion at lower levels. Rupee weakness is causing volatility, however, sharp fall in commodity prices and a cool-off in bond yields are supporting the market at lower levels.  

The good part is that FIIs are showing some buying interest after a long period of continuous selling. They are changing their gear in the F&O market as well but the market is still oversold and has good scope for a short-covering rally.  

On the upside, 16200 looks like an immediate target whereas the possibility of a 16500 level can't be ruled out. On the downside, 15700-15500 is acting as a strong support demand zone. 

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services  

While crude crash along with corrections in other commodities like metals is a bearish signal indicating increasing possibility of recession in the US, commodity crash is positive for the Indian economy and FIIs turning buyers is a bullish signal for Indian equity market. 

It is important to watch whether these signals are one offs or will they sustain. With valuations reaching fair levels, investors can buy high-quality stocks in a calibrated manner. Stocks that FPIs sell like financials and IT are good segments to bet now. 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)