India’s equity benchmarks reversed losses and ended with gains, extending their bull run to the fifth consecutive week, thwarting a global selloff in risky assets, a day after July meeting minutes Federal Reserve officials have indicated that rates will stay higher longer to bring down inflation.
The 30-stock BSE Sensex index and the broader NSE Nifty index both ended with marginal gains, just at the end of the trading session on Thursday.
The Sensex started the day sharply lower at 60,080.19 points and hit a low of 59,946.44 points, but ended at 60,298.00, a gain of 37.87 points, 0.06%, per report at Wednesday’s close. Nifty climbed 12.25 points, or 0.07%, to 17,956.50.
In the Sensex pack, Kotak Mahindra Bank, Larsen & Toubro, Bharti Airtel, UltraTech Cement, Power Grid, IndusInd Bank, State Bank of India and ITC were among the winners.
On the other hand, Dr Reddy’s Laboratories, Wipro, Infosys, Mahindra & Mahindra, Axis Bank and Nestlé were among the laggards.
Bharti Airtel jumped 1.59% to Rs 733.25 after receiving the 5G spectrum allocation.
“No hassle, no tracking, no running down the halls and no big complaints. This is the ease of doing business at work at its best,” said the Telecom Tycoon.
Kotak Bank jumped 3.45% to Rs 1904. L&T rose 2.09% to Rs 1894.20. UltraTech Cement, IndusInd Bank, Power Grid Corporation, State Bank of India and ITC were among Sensex’s top winners.
Dr Reddy Laboratories fell 2.18% to Rs 4,225.55.
IT stocks came under heavy selling pressure. Wipro slipped 1.83% to Rs 435. Infosys fell 1.50% to Rs 1582.70. Tata Consultancy Services fell 0.57% to Rs 3,381.25. HCL Technologies closed down 0.65% at Rs 973.85.
Mahindra & Mahindra, Axis Bank, Nestlé India, Titan and Sun Pharma were among Sensex’s biggest losers. Half of the 30 scripts that are part of the Sensex benchmark closed in the red.
But the two benchmark exchanges have recouped all losses suffered in 2022 due to gains of almost 11% over the past four weeks, with Indian stocks posting their best week since February at the end of last month.
The broader NSE Nifty 50 index hit a four-month high in the previous session and extended that winning streak to an eighth straight day.
The Sensex started the day down sharply at 60,080.19 points and hit a low of 59,946.44 points. The Sensex briefly turned positive in the morning session, hitting a high of 60,287.13 points.
“The Fed minutes are weighing, but I think India will be an exception, despite what is happening in the world,” AK Prabhakar, head of research at IDBI Capital, told Reuters.
“As momentum builds, such news will not derail Indian markets. Something new has to happen,” Prabhakar added.
Domestic equities defied a broad global sell-off as strong capital inflows continued to boost Indian equities.
Foreign institutional investors remained net buyers in the capital market on Wednesday as they bought shares worth Rs 2,347.22 crore, according to the latest exchange data.
Shares on Wall Street fell globally for the first time since the start of this week as the Fed gave no clear direction in its July meeting minutes released Wednesday.
Some Federal Open Market Committee (FOMC) policymakers wanted rates to be held “at a sufficiently restrictive level” for an appreciable period of time to stop inflation in its tracks.
Following Wall Street’s declines, MSCI’s largest index of Asia-Pacific stocks outside Japan fell 0.5%, European stocks fell as a Central Bank official warned that the outlook had not improved.
Over the past two months, equities have made a significant comeback as the rate of monetary tightening was expected to peak. However, they are still vulnerable to warnings from central bankers that the battle against price pressures is far from over.
“After a very strong run into risky assets thanks to a narrative that we may have seen ‘peak inflation’, yesterday we brought that to a halt as several headlines emerged which poured weight. “Cold water on the prospect that central banks were about to abandon a rate hike,” Deutsche Bank analysts told Reuters.
The dollar climbed to a three-week high. The pound fell back below $1.20 while the euro fell 0.1% to $1.0168.
Although some investors found reason to cheer in the Federal Reserve minutes, there is little conviction that the specter of high inflation and corresponding interest rates will fade anytime soon.
This is keeping markets on edge and after the recent rally in risky assets, some fund managers are warning against the outlook.
“Investors urgently need to hedge – the environment that led to this bear market rally, which we admit we haven’t seen to be as strong as it has been, is about to change. Mohammed Apabhai, head of Asia-Pacific business strategies at Citigroup, told Reuters.
“The Fed has seen monetary conditions ease and is now poised to continue tightening. In particular, it is now expected to double the pace of quantitative tightening from the current $47.5 billion to $95 billion from the 1st september.”
The the rupee weakened sharply to near 79.70 against the dollar on Thursday, following a broad sell-off in global risk assets even as domestic equities bucked the grim global trend.
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