Indian equities rebounded, set to end a two-week losing streak, with auto and IT stocks leading the gains. This upward momentum was driven by robust earnings in the auto sector and the U.S. Federal Reserve’s decision to pause rate hikes.
The NSE Nifty 50 index surged by 0.70% to 19,266.55, with nearly all of its 50 constituents trading in the green. Simultaneously, the S&P BSE Sensex rose by 0.66% to 64,504.50.
Information technology (IT) stocks climbed 1%, extending their gains from the previous day when the Federal Reserve announced a less hawkish-than-expected monetary policy stance. IT companies significantly benefit from revenue earned in the United States.
The auto sector also made substantial gains, increasing by nearly 1%. This rise was led by Tata Motors, which surged over 2% after posting strong quarterly earnings, positioning it among the top gainers in the Nifty 50.
Analysts highlighted that India stands out among emerging markets in terms of growth potential, offering an attractive risk-reward perspective. The country is expected to attract a significant share of foreign inflows into emerging markets, especially in the wake of the Federal Reserve’s rate pause.
Additionally, analysts noted that the margin of safety currently appears to be relatively higher in large-cap stocks compared to small- and mid-cap stocks. Small-cap and mid-cap indices gained 1.2% and 0.75%, respectively, outperforming large-cap stocks, with strong retail inflows providing support.
Furthermore, in the broader Asian equities market, the MSCI Asia ex-Japan index rose by 1.4%.
In individual stock news, Container Corporation of India saw a 5% increase in its shares after posting higher second-quarter profits, driven by robust demand in the logistics sector. Meanwhile, JK Lakshmi Cement climbed 6% following strong earnings and capacity expansion at its Surat, Gujarat plant. In the pharmaceutical sector, Lupin gained over 2% after announcing the launch of a drug used to control seizures, estimated to generate annual sales of $37 million in the U.S.
Indian Markets Gain on Positive Macros and US Rate Pause, Fall in Bond Yields:
Indian stock markets registered gains driven by favorable domestic macroeconomic factors, robust auto sales numbers, increased GST collections, strong factory data, and better-than-expected Q2 earnings. A prolonged pause in U.S. interest rate hikes and a drop in bond yields also contributed to the positive sentiment.
Vinod Nair, Head of Research at Geojit Financial Services, noted that the fall in U.S. bond yields signals an extended break in interest rate hikes. He highlighted that domestic macros are currently favorable, underpinned by positive auto sales, a surge in GST collection, strong factory data, and Q2 earnings that exceeded estimates.
The buoyant mood in the Indian markets was also reflected in Asian markets, with Seoul, Tokyo, and Hong Kong ending in the green, while Shanghai experienced a lower settlement. European markets were trading positively, and U.S. markets recorded gains on the previous day.
The global oil benchmark, Brent crude, saw a substantial rise of 1.67% to reach $86.12 per barrel, further contributing to the positive sentiment in Indian markets.
Despite the overall optimism, data indicated that foreign institutional investors (FIIs) divested equities worth ₹1,816.91 crore on Wednesday, based on exchange data.
The benchmark BSE index had previously declined by 283.60 points or 0.44% before settling.
Indian benchmark indices Sensex and Nifty staged a strong rebound on Thursday, recovering nearly 1% after a two-day decline. This surge was primarily driven by a global market rally and the U.S. Federal Reserve’s decision to maintain unchanged interest rates.
- Sensex Soars: The 30-share BSE Sensex surged by 489.57 points or 0.77%, settling at 64,080.90. It reached an intraday high of 64,202.64, marking a substantial gain of 611.31 points or 0.96%.
- Nifty’s Upward Move: The Nifty, reflecting the broader market sentiment, climbed by 144.10 points, equivalent to 0.76%, closing at 19,133.25.
- Top Gainers on Sensex: Among the companies listed on Sensex, leading gainers included IndusInd Bank, Tata Steel, Tata Motors, Sun Pharma, Infosys, Mahindra & Mahindra, NTPC, Bharti Airtel, HCL Technologies, and Axis Bank.
- Notable Declines: Tech Mahindra and Bajaj Finance saw a decline during the trading session.
Market Analyst’s Perspective:
The positive sentiment in the global and domestic markets was primarily attributed to the U.S. Federal Reserve’s decision to keep interest rates unchanged. Furthermore, the decline in U.S. bond yields indicates that interest rate hikes might be delayed, contributing to the market’s resurgence.
Additionally, India’s domestic economic indicators have been favorable, including robust auto sales figures, a surge in GST (Goods and Services Tax) collection, strong factory data, and Q2 quarterly earnings that exceeded estimates.
Global Market Trends:
Across Asian markets, Seoul, Tokyo, and Hong Kong reported gains, while Shanghai experienced a minor dip. European markets were also trading positively, with U.S. markets concluding Wednesday with notable gains.
Oil Prices: Global oil benchmark Brent crude rose by 1.67% to $86.12 a barrel, reflecting the ongoing developments in the energy markets.
Foreign Institutional Investors (FIIs): Exchange data revealed that FIIs offloaded equities worth ₹1,816.91 crore on Wednesday.
Recent Decline: In the previous session, the BSE benchmark had declined by 283.60 points or 0.44%, closing at 63,591.33, while the Nifty dropped by 90.45 points or 0.47%, ending at 18,989.15.
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