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India’s benchmark indices rose sharply on Friday, snapping a seven-session losing streak, as the rout in global equities and bonds showed signs of ebbing. Lack of negative surprises in the Reserve Bank of India’s (RBI’s) monetary policy and a benign outlook for inflation also aided sentiment.
The Sensex began the session in the red, but rose after the monetary policy announcement to close at 57,427, with a gain of 1,017 points, or 1.8 per cent. The Nifty surged 276 points, or 1.6 per cent, to settle at 17,094, capping a tumultuous week.
The Sensex finished the month with a decline of 3.5 per cent, the biggest monthly slide since June 2022, even as the index managed to rise 8.3 per cent during the quarter, outperforming most global peers.
Market players also attributed Friday’s gains to short-covering and value buying after seven straight days of losses, during which the benchmark indices had declined over 5 per cent.
Foreign portfolio investors (FPIs) continued to be net sellers of Indian equities for the eighth straight session and divested shares worth Rs 1,565 crore. FPIs have yanked out close to Rs 20,000 crore during this period.
The RBI on Friday raised the repo rate by 50 basis points to 5.9 per cent. More than the monetary policy decision, the RBI’s assessment of inflation and growth propelled the markets, said experts.
“There were no negative surprises. A steeper hike was expected amidst the chatter around elevated interest rates in the US. At least the language was expected to be more hawkish. There was no steep cut in the GDP forecast. Moreover a relief rally was bound to happen after a decline of seven days. And the moment there is some positive news, a bit of short-covering is expected to happen,” said UR Bhat, co-founder, Alphaniti Fintech.
The gains made by US equity futures and European shares further boosted investor sentiment. The respite was seen in broader markets with the Nifty SmallCap 100 and Nifty MidCap 100 indices rising 1.6 per cent each.
Going forward, investors will be keenly watching the September-quarter results. The festival season and the fall in raw material prices in the previous quarter are likely to give a fillip to earnings.
“The rebound was overdue but the key is to hold the gains amid the feeble global cues. We feel the recovery would strengthen above 17,200 in the Nifty, while 16,800 would continue to act as critical support. Investors should stay focused on risk management and prefer index majors over others,” said Ajit Mishra, VP-research, Religare Broking.
The market breadth was strong, with 2,254 stocks advancing and 1,174 declining.
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