The benchmark indices on Thursday climbed 1.5 per cent as Reliance Industries (RIL) extended its winning run. Positive global cues and a renewed interest in IT and financial stocks also helped maintain momentum.
The Sensex ended the session at 57,911, a gain of 874 points or 1.5 per cent. The Nifty, on the other hand, ended the day at 17,392, a gain of 256 points or 1.5 per cent. In the last two sessions, the benchmark indices have gained 2.6 per cent — erasing over half the losses made in the preceding five sessions.
Shares of RIL rose 2.4 per cent to end at a record high of Rs 2,782. It accounted for nearly a fourth of the index gains. Infosys, HDFC twins and TCS were the other big contributors.
Moderation in selling by foreign portfolio investors (FPIs) helped stocks recoup losses. FPIs sold shares worth Rs 714 crore., while their domestic counterparts pumped in Rs 2,823 crore. “There is a lot of interest now in domestic circles as stocks are available at slightly lower levels. The bearishness of the last few days has given rise to bullishness.
There is also concentrated buying in some specific counters,” said UR Bhat, co-founder, Alphaniti Fitech. The US stock index futures rose amidst a solid start to the earnings season. The encouraging results by some companies stoked optimism that companies can resist margin pressure due to rising inflation and slowing economic growth.
Analysts said central banks are unlikely to pull back from their aggressive monetary tightening path given the commodity shortages due to the Russia Ukraine war is keeping prices elevated. The consumer prices in New Zealand grew at the fastest pace in three decades, strengthening the argument for tightening monetary policy.
A report by the US Federal Reserve, released on Wednesday, underlined continuing inflationary pressures. And the potential of higher prices and geopolitical tensions to slow growth. The Fed has already indicated its willingness to hike rates by 50 basis points, a prospect that the markets have priced. The 10-year US bond yield was trading close to its December 2018 highs.
Investors will also keenly watch corporate results. "The first two corporate results were not exactly to the market's liking. It got slightly better since. After a few more results, the markets will make up their mind on which way to move," said Bhat.
Ajit Mishra, vice-president, research, Religare, said indications favour further rebound in the index; however, participation of the banking pack would be critical for any sustained move. "The focus should be on sectors like energy, auto, pharma and banking for long trades."
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