Late rally helps Nifty end May series above 10700; Sensex zooms 416 points on HDFC Bank aid

Mumbai, May 31: Bulls were back with vengeance on Thursday, the expiry day of May futures & options contracts as the late rally helped benchmark indices gained more than 1 percent, driven by banking & financials, oil & gas stocks and Infosys.
Short covering towards the end of session and the gains in global stocks on easing of political concerns in Italy also lifted market sentiment. Investors awaited March quarter GDP growth numbers due later in the day.
The 30-share BSE Sensex rose 416.27 points or 1.19 percent to 35,322.38 and the 50-share NSE Nifty gained 121.80 points or 1.15 percent at 10,736.20.
In the May series, the Sensex gained 1.7 percent and the Nifty rallied 1.1 percent while Bank index surged more than 7.5 percent.
“Indications are positive and we believe Nifty will test 10,800 shortly. However, we’re seeing limited participation thus focus should be on stock selection,” Jayant Manglik, President, Religare Broking said.
Global cues, movement in crude oil price and progression of monsoon will dictate the market trend from hereon, he feels.
On the global front, Asian markets ended higher following rally in US markets last night, as the recent political concerns in Italy eased. Hong Kong’s Hang Seng ended up 1.4 percent and China’s Shanghai Composite gained 1.9 percent while Japan’s Nikkei rose 0.83 percent.
European stocks also traded mildly higher at the time of writing this news.
Oil prices dipped on unexpected growth in US crude inventories and likely increase in crude output from OPEC and non-OPEC members. Brent crude futures fell half a percent to $77.10 a barrel.
The Nifty Midcap index underperformed frontliners, falling 0.4 percent on weak market breadth. About two shares declined for every share rising on the BSE.
HDFC Bank was the second biggest gainers among Nifty50 stocks and main driver for the rally. It gained 4.5 percent ahead of opening of FII trading window on June 1. Global brokerage firm Macquarie sees FII buying worth $1 billion.
TCS fell a percent after the stock adjusted for bonus share issue in the proportion of one share for every share held.
Meanwhile, Signalling a positive stance on the market ahead, Gautam Shah of JM Financial said the volatility is healthy for the Street. “The current consolidation phase means the Nifty could hover around 10,700. A breakout is visible in the next couple of weeks and the index could inch towards 10,900 as well.”
The charts indicate that the market could also clock fresh records with the Nifty around 11,800 by December-end, Shah told CNBC-TV18 in an interview. However, he was quick to add that that the index needs to trade above its key support level of 10,200 for his prognosis to come true.
What could aid the upmove may be ebbing concerns on US bond yields, crude and dollar-rupee moves. Crude has come off a bit, while dollar-rupee has also seen a reversal from strength. “Going forward, crude could trade around $71-72 per barrel.”
Among sectors, Shah is betting big on fast moving consumer goods (FMCG) in the current market. “There are indications that there is a lot of juice left here.” In the case of IT, he has a target of 15,000 on the CNX IT index.