Bank Nifty, Nifty: Anil Singhvi decodes rally, despite RIL share plunging in major way
Bank Nifty saw a thousand-point rally even when the Nifty heavyweight Reliance Industries’ showed significant underperformance. How should this momentum be viewed in the banking stocks and is it there to stay? Zee Business Managing Editor Anil Singhvi explains the phenomenon
Bank Nifty saw a thousand-point rally even when the Nifty heavyweight Reliance Industries’ showed significant underperformance. How should this momentum be viewed in the banking stocks and is it there to stay? Zee Business Managing Editor Anil Singhvi explains the phenomenon.
The Market Guru said that Monday’s action could be summed by three factors viz. under ownership, strong results and index management.
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The Strong momentum after 23 March 2020 saw Nifty attaining a high of 12025 while the Bank Nifty has failed to better its own high of 25,232, though it managed to get close to it on Tuesday. The continued underperformance is the primary reason for its Tuesday rally coupled with 'underownership' i.e. the positions held by people were fewer.
The overall sector is now being considered for rerating after the strong results being posted by HDFC Bank and ICICI Bank, the Managing Editor said.
On top of this, the festive season has also contributed to the rally as the demand is being generated now.
The sudden jump in the banking stocks was surprising, though, Singhvi said.
It is difficult to gauge the mood of the markets.
He further said that even the Foreign Institutional Investors (FIIs) have an under ownership in the index stocks.
All these factors contributed to the excellent runoff Bank Nifty on Tuesday, he said.
He also said that the fall in Reliance Industries stocks was also surprising. Nobody expected the prices to fall by 10 per cent in a day. He said that the Q2Y21 results were not that bad, for this stock to have fallen by this much.
It augurs well for the markets that the Nifty ended in the green despite a 10 per cent fall in RIL shares and Bank Nifty rising to the occasion.
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It has also busted the fear factor that if Reliance does not perform, who would take Nifty up. This is not to say that the markets would not need this stock, the Market Guru added.
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12:50 PM IST