Global Trends Lift Sensex and Nifty: Banking and IT Stocks Lead the Rally

Market Opening Boosted by Soft US CPI Data

Indian stock market represented by Sensex and Nifty 50 opened on positive note on 16 May, pushed by news of lower than expected US inflation. This development driven rise in key US indices like S&P 500 and Nasdaq 100, each rising more than 1%. This positive global sentiment offered level of relief to domestic investors during ongoing tensions surrounding India's general election results.

Analyst Insights and Market Outlook

Ajit Mishra, Senior Vice President of Research at Religare Broking pointed out potential for further gains in Indian levels provided India volatility index experiences some relief. While India VIX had paused its upward trend in previous two sessions, concerns about volatility persist especially until election results are finalized. He emphasized historical pattern of India VIX surging to 29 during past elections indicating possibility of further rise. He projected possibility recovery for Nifty 50 towards 22,350 - 22,400 range on May 16 with resistance expected at 22,400 and support at 22,150.

Market Performance and Sector Analysis

As of 9:17 am Sensex was up 288 points or 0.4% at 73,275 while Nifty 50 had gained 88 points or 0.4%, reaching 22,288. The broader market also saw gains with BSE Midcap and BSE Smallcap indices rising by 0.5%. IT, banking and financial services stocks led charge in Nifty, underscoring importance of monitoring banking stocks due to their huge weight in the index.

Insights on Foreign Institutional Investors (FIIs) and Market Dynamics

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services highlighted influence of FIIs on current market dynamics, attributing their selling to outperformance of Chinese stocks. He pointed out that FIIs are turning to cheaper equities in other emerging markets including India, Indonesia and Thailand, as opposed to more expensive options. Analysts suggest that victory for BJP government in elections could trigger renewed buying activity by FIIs.

Analyst Recommendations and Sector Outlook

Analysts express bullish sentiment towards automobile and FMCG stocks citing revival of rural economy as key factor. They are advising investors to be cautious with their stock choices especially in this volatile market. The performance of banking sector remains critical for sustaining any strong upward trend in market.

Overall market's positive momentum driven by favourable global cues, particularly softer US CPI data, underscores strength of Indian equities despite all the uncertainty.