Stock Market: Global cues go wild; hospitality shines from pandemic cloud

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By S Jha

New Delhi, May 18: Strong rally in the Indian indices were sold as the US debt ceiling negotiations test the nerves of the investors. Nifty after opening strongly with gains of over 100 points gave up position of strength to close with a cut of over 50 points.

Bank Nifty, which has been an outperformer, too lost much of its gains to close with minor gains. Bank Nifty is being helped with bullish momentum in heavyweight scrips such as ICICI bank, Axis Bank and HDFC bank, while AU Small Finance Bank along with IndusInd Bank have been outperforming their peers. Analysts are sounding bullish on the Bank Nifty, as inflation in India has gone below the estimate of the Reserve Bank of India.

Dow Jones was trading with a cut of over 200 points in the afternoon session. The US debt ceiling negotiation is likely to pick strength only next week, as US President Joe Biden has gone to Hiroshima to take part in the G7 Summit. Biden has cancelled his participation in the Quad Summit in Australia, which itself has been cancelled, to be available for the debt ceiling negotiation.

With the US Presidential election slated for next year, the delayed conclusion of the negotiations to avert a sovereign default is testing the patience of the investors. Dow Jones had closed on a bullish note on Wednesday, but feat factor added to the bearishness on the bourses amid sharp fall in the joblessness claim, which again added to the concerns over the likely continued hawkishness of the Federal Reserve.

The foreign institutional investors are, however, least affected by the swing in the sentiments, as they again reported a net buy of over Rs 900 crores in the cash market. The strong institutional action is giving much stability to the indices.

But profit booking at the higher level is also being reported. The sharp dip in the likes of Kaynes Technology, which has been trending after posting a steller result, along with several other companies showed signs of profit booking.

But the FII-led rally in the stock market has several winners, and one sector that stands out is hospitality, which seems to have finally come out of the dark shadow of the Covid-19 pandemic. The likes of Indian Hotel, EIH Hotel, Lemon Tree Hotel and others have gained strongly on the bourses, reporting almost an average gain of over 65 per cent in the last one year.