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India’s benchmark indices surged close to 2 per cent on Wednesday as the decline in global oil prices eased concerns around macroeconomic fundamentals. The sentiment was also boosted after Russia hinted at progress in peace talks with Ukraine. China’s vow to stabilise its market also added to the cheer.
The benchmark Sensex ended the day at 56,817, with a gain of 1,040 points or 1.86 per cent. The Nifty, on the other hand, ended the session at 16,975, a gain of 312 points or 1.87 per cent. Both the indices are up by nearly 8 per cent compared to last week.
A 25 per cent drop in crude prices from recent highs, favourable outcome in state polls and bargain hunting after a sharp drop in the market have propelled the market.
The rupee spurted 34 paise to 76.27 against the US dollar on Wednesday, tracking positive domestic equities and Asian currencies.
Foreign portfolio investors (FPIs) joined forces with domestic institutional investors (DIIs) on Wednesday, with the former buying shares worth Rs 312 crore and the latter pumping in Rs 772 crore. According to experts, FPI selling this year has exceeded Rs 1 trillion.
Since the beginning of the Russia-Ukraine war, rising crude prices have been one of the biggest concerns of equity investors as India imports a huge chunk of its crude requirements. Experts believe that with oil prices now expected to slip below $100 a barrel, equities can outperform their global peers.
A rally in Hong Kong’s Hang Seng (nearly 10 per cent) spilled over to other Asian markets. Chinese stocks rallied after the China State Council promised to step up efforts to support financial markets and the real estate sector.
“The strong rebound in China and technology stocks helped Asia throughout the day. Oil prices have remained subdued. Peace talks are getting more positive,’ said Andrew Holland, chief executive officer (CEO), Avendus Capital Alternate Strategies.
Experts said it remains to be seen how markets react to the highly-anticipated 25 basis points rate hike by the Fed–its first since 2018.
The ongoing war in Ukraine and the sanctions imposed on Russia have led investors to believe that the Fed will not surprise them by going for a bigger hike. Analysts said that the Fed Chief’s statement would determine the market trajectory.
” The Fed Chief’s stance will be keenly watched. Will he be saying we will take certain measures now and see how this will play out? Or is he going to say no matter what, we have to get inflation down,” Holland added.
The word in the market was positive, with 2,265 stocks gaining against 1,168 declining. All constituents of the Sensex, barring two, ended the session with gains. Infosys gained 2.7 per cent and was the biggest contributor. All BSE sectoral indices ended with gains. The realty index gained the most at 3.6 per cent.
“Easing of FII outflow and fall in crude prices are strengthening the domestic trend. Positive global cues and strong returns in the Chinese market in anticipation of stimulus supported the trend. The world equity markets have stabilised and have factored in a 25 bps hike by the US Fed,” said Vinod Nair, head of Research at Geojit Financial Services.
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