D-St Party: Indices log biggest single-day gain in four months

D-St Party: Indices log biggest single-day gain in four months

Mumbai: India’s stock benchmarks surged over 1.5% on Friday – the biggest single-day gain in four months – as dovish commentary by one of the members of the US Federal Reserve’s rate-setting panel and fresh investments in Adani Group stocks bolstered sentiment.

The Sensex came close to 60,000 after a 1,058-point surge. It eventually closed at 59,808.97, up 899.62 points, or 1.53%. The Nifty advanced 272.45 points, or 1.57%, to close at 17,594.35 – above its 200-day moving average (DMA), a key trend indicator, of 17,404.11.

Markets had gone overboard with pessimism on Indian equities,” said Samir Arora, founder and fund manager, Helios Capital Management. “And then Adani Group issues further fuelled the selloff.” Arora said the overhang on the power-to-ports conglomerate may gradually ease and Thursday’s secondary market deals are a precursor to that.

Shares of banks and financials were among the top gainers on Friday as the Adani Group’s move to raise ₹15,446 crore by selling stakes in four companies to US-based GQG Partners on Thursday eased investor concerns over lenders’ loan exposure to the conglomerate. The Bank Nifty index surged 2.1% and the PSU Bank index jumped 5.4%. “Friday’s gains will give more strength to the market in near term led by banking stocks,” said Rishi Kohli, managing partner and CIO, hedge fund strategies, InCred Alternatives Investments. “Various derivative and technical indicators as well as positioning of foreign funds in index futures and HNIs in stock futures were pointing towards a recovery.”

All Sectoral Indices in Green
On Friday, foreign portfolio investors (FPIs) bought shares in the cash segment worth Rs 246.24 crore while domestic institutions bought equity worth Rs 2,089.92 crore, according to provisional stock exchange data.”Overall, India underperformed its global peers as the trade shifted to China, but the euphoria of China’s reopening will normalise. That’s when India should start outperforming its peers,” Arora said.

Analysts said the benchmark indices as well as the Bank Nifty index had slipped into oversold territory after extending declines for eight consecutive sessions earlier this week, mirroring the weak sentiment in global markets. Therefore a rally in Indian equities was expected, they said.

“Our markets are still not out of the woods yet,” said Rupak De, senior technical analyst, LKP Securities. “The Nifty needs to cross 17,650 to head towards a level of 18,200 in the near-term.”

Friday’s buying saw the India Volatility Index (VIX) cool off sharply. The VIX – a measure of traders’ perception of near-term risks to the market – ended at 12.18, down 6.09% from the previous close, reflecting confidence in the markets.

Overnight, US indices rose 0.8-1.1% on Thursday. This sparked a rally in Asian and European indices on Friday. Stocks rallied and bond yields cooled after Atlanta Federal Reserve president Raphael Bostic said he favoured a “slow and steady” course of interest rate hikes as the real effect of recent increases in the US will be visible in the spring of 2023. On Friday, US indices extended their gains and were up 0.68-1.32% at the time of going to press.

Back home, all sectoral indices ended in the green led by banks, metals, power and utilities. However, gains in broader markets were limited with the NSE Midcap 150 index and NSE Smallcap 250 index rising in the band of 0.5-0.8%. Outside the Adani Group, SBI logged steep gains. Shares of the country’s largest lender advanced 5.1%. Bharti Airtel, SBI Life, and Tata Steel were other top gainers among the frontline stocks.

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