Agriculture Reaps a Rich Harvest
The Indian stock markets have been a tearing hurry in the last five trading sessions with frontline indices continuing to reach higher levels in uncharted territory. The Nifty 50 index has jumped around 3.58 per cent in the last five trading sessions and it went on to cross the landmark level of 17,000. It took almost 19 trading sessions for the Nifty to cross the landmark level of 17,000 from the 16,000 mark. Interestingly, in the past five trading sessions, the broader markets outperformed the frontline gauge where the Nifty Mid- Cap 100 index soared 5.47 per cent and the Nifty Small-Cap 100 index advanced 4.43 per cent.
The above statistics testify that investors may be taking more risks as stocks continue to drive higher. In the last one week, everything has been coming up roses for the Indian markets and one of the major news was that India’s economy grew at a record pace of 20.1 per cent in the April-June quarter of this financial year as against 24.4 per cent contraction seen during the same period last year. Such strong recovery can surely be deemed as nothing less than outstanding despite a low base. Growth in Q1FY22 was led by manufacturing, mining and construction sectors.
Meanwhile, to the surprise of many, the agriculture sector did well which grew at 4.5 per cent on a high base as compared to 3.5 per cent growth in the year-ago quarter. The agriculture sector did well despite the fact the second wave of the corona virus impacted rural India as well. Furthermore, data released by the RBI on sectoral deployment of bank credit showed that credit to agriculture and allied activities continued to perform well, registering an accelerated growth of 12.4 per cent in July 2021 as compared to 5.4 per cent in July 2020. So, the incoming data indicates that agriculture and allied sectors should be on the radar.
Another sector that has commanded attention on the technical front is Nifty Energy which made an all-time high of 21,066.10 in the month of June this year. Thereafter, it declined 10.74 per cent from its all-time high. The decline halted between 50 per cent to 61.8 per cent retracement of the up-move from the low of April to the high of June. On the weekly chart it has bounced back from the upward rising trend line and on the monthly chart it has formed a sizeable bullish candle. Hence, keep a close watch on this index.
On September 1, market participants were worried about the implementation of the final phase of peak margin and many were of the view that volumes would shrink. However, on this day, NSE cash segment’s traded value stood at Rs 64,228.35 as against the average daily turnover of Rs 62,923 crore in August and Rs 62,653 crore in July. Thus, NSE witnessed a slightly higher turnover against the daily average seen in the months of August and July. Meanwhile, futures and options’ turnover stood at Rs 71,43,110.66 crore as against Rs 55,63,110.62 crore seen in the prior trading session.
Therefore, the data indicates that market participants are mentally prepared with this new norm and since the roadmap was laid way back, it has not dented the sentiment as much as was anticipated. For traders and investors who follow the FIIs’ flow, there is good news on this front as well. On Wednesday, the FIIs turned net buyers for the third day in a row. In the last three trading sessions FIIs have cumulatively bought to the tune of Rs 5,750 crore in the cash market. The only dampener in sight at the moment seems to be the rising virus cases. One may argue that the vaccination pace is also picking up with India administering record vaccination doses in a single day. But if we look at the global scenario, the picture is grim.
For example, in Israel, despite the population having being doubly vaccinated, there has been an increase in hospitalisation due to new cases. So, now the big question is whether this is the right time to step back after witnessing a stupendous rally? Well, if you are trader, maintain a trailing stop loss and ride the trend. Trailing stop loss would be the prior bar low and if you are a longterm investor, keep your focus on quality small-cap names as we believe these may hit a fresh all-time high if all goes well.
