NEW DELHI: After a steep decline on Monday, the bulls took full control of Dalal Street on Tuesday following favourable global cues, which included a rally of up to 2.5% in the US market. Helped by strong buying support in heavyweights TCS, HDFC Bank and Reliance Industries, Sensex added 1,275 points, or 2.25%, to close at 58,065, while Nifty50 reclaimed the 17,000 mark and ended at 17,280, a gain of nearly 400 points or 2.29%.
“The movement in the global markets is in anticipation of a pivot by the US Fed towards slowing down or stopping liquidity tightening due to various financial risks now apparent. The business updates shared by banks and other financial intermediaries for Q2FY23 have been encouraging, and thus, the financial sector is leading the rally in India, leading to upbeat estimates for the overall earnings season,” said Nishit Master, Portfolio Manager, Axis Securities PMS.
An unexpected slowdown in the US Manufacturing Purchasing Managers’ Index (PMI) has given hope that the US Fed would slow the pace of policy tightening even as it maintained a hawkish stance in its September meeting. The Fed’s and other central banks’ recent indication of future rate hikes to control inflation has spooked investors worldwide but now it appears that policymakers won’t be very aggressive. Following suit, US bond yields fell in tandem with the US dollar.
The Indian Rupee ended the Tuesday session at 81.52/USD, up from 81.8725 in the previous session and foreign institutional investors (FII) pumped in a net of Rs 1345 crore in local equity market. Asia-Pacific markets too saw strong buying with Nikkei 225, Topix, Kosdaq, and S&P 200 climbing in the range of 2 to 3% in Tuesday’s trade.
S Ranganathan, head of research at LKP securities, said, “Ahead of the festive season, the street is optimistic on retail demand across segments and we saw financials lead from the front today. Participation of the IT sector today lent ammunition to the bulls, as nearly all sectoral indices ended in the green as we near the end of the Navratri festival.”
Going ahead, analysts are bullish on October as the festive month has given positive returns in the last eight out ten years. “Markets have a record of troughing out in October. This may happen this October too. The ‘risk-off, risk-on’ texture of the market is in response to fast changing economic and market signals,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.