Sensex and Nifty staged a sharp recovery on Tuesday after sustained selling in the previous sessions, in tandem with Asian markets. The overnight rally on Wall Street and China’s pledge to boost monetary-policy support for its Covid-hit economy also boosted investor sentiment on Tuesday, said market watchers.
On Tuesday, India was also the top performer among other Asian markets. China’s Shanghai Composite declined 1.4% on Tuesday, whereas Nikkei 225 and Hang Seng advanced just 0.4% and 0.3%, respectively. While the Sensex settled 776.72 points or 1.4% higher at 57,356.61, the broader Nifty-50 ended higher by 246.85 points or 1.5% at 17,200.80. Heavyweight Reliance Industries and Bajaj Finance were the top contributors to the Sensex’s gain on Tuesday — marking the third-best session for the benchmark so far in April.
Shrikant Chouhan, head of equity research (retail), Kotak Securities, said, “While markets are in an oversold position, the falling yields in US markets and sliding crude oil prices came as a major respite for investors, who partially covered their short positions. However, other concerns like China’s coronavirus problems, likely interest rate hike woes in the US and the conflict between Russia and Ukraine will continue to be potential market spoilers. Technically, once again the Nifty re-claimed the 17000-mark and succeeded to close above the 50-day SMA, which is grossly positive for the markets.”
However, selling by foreign portfolio investors (FPIs) continued to weigh on the markets even as the domestic institutional investors provided firm support. On Tuesday, overseas investors sold shares worth $153.3 million against domestic purchase of $214.7 million, provisional data on exchanges showed. According to Bloomberg data, FPIs have sold shares worth $3.4 billion so far this month, while on the other hand, domestic investors bought shares worth $3.3 billion. Experts believe that negative flows from FPIs will continue in the near term amid the rate hike scenario.
Neeraj Chadawar, quantitative equity research, Axis Securities, said, “FII flows are likely to remain volatile on account of aggressive rate hike expectation amid the rising inflationary scenario. So, investors should limit the risky bets in the current market environment and focus on the fundamentals where the earnings visibility is intact.” Sector-wise, all sectors witnessed buying interest and ended higher on Tuesday — with Nifty Auto and Energy adding more than 2% each. Among broader markets, BSE mid-cap and small-cap indices advanced 1.6% and 0.8%, respectively. Overall, of the 3,502 stocks traded on the BSE, 1,907 advanced on Tuesday.
