NEW DELHI: Equity markets witnessed a major surge on Thursday with Benchmark indices- Sensex and Nifty- ending higher for the second straight session, led by heavy buying in Bajaj Finance and Bajaj Finserv shares.
The Sensex jumped 1,041.47 points to end at 56,857.79 while the Nifty moved ahead 287.80 points to close at 16,929.60. Bajaj Finance was the top Sensex gainer ending 11% higher, followed by Bajaj Finserv rising 10% post better than expected June quarter earnings.
The rally came on the back of positive commentary made by FOMC (Federal Open Market Committee) in its July meet and its decision to raise the interest rate by 75bps which was in line and factored by the market.
Federal Reserve Chairman Jerome Powell pointed to the robust labour market as evidence that the US economy is not in recession and said that at some point in time they will slow down the rate of interest hike. The statement lifted global market sentiment.
However, the second quarter US GDP data proved Fed chairman’s statement wrong as the US economy in the second quarter of 2022 shrank by 0.9%. This is the second straight quarter where the economy has contracted. In Q1CY2022, the US GDP had tumbled by 1.6%. The US economy now is in a (technical) recession, with GDP falling for the second quarter in a row.
The negative US GDP numbers may play spoilsports on Indian market sentiment today. However, the US equity markets on Thursday recovered the early losses and remained flat during the day. “Although we have witnessed a strong rally today (Thursday) in our markets too, one needs to be watchful of the second quarter US gross domestic product (GDP) numbers. This assumes significance since the first quarter GDP declined by 1.6% annualised and consecutive quarter declines in GDP are widely seen as a recessionary climate.” Said Vineet Bagri, Managing Partner- TrustPlutus Wealth.
Bagri added that we also need to see the FPI flows over the next few weeks given the 75bps rate hike announced. In a major relief, July has seen minimal FPI outflows, the trajectory of which could change over the next few weeks, he said. On Thursday, FPI were net buyers of Indian equities and debts to the tune of Rs 1,638 crore, while domestic institutional investors were net buyers of Rs 600 crore.