India's equity markets rebounded on Friday from sharp losses earlier in the week. The benchmark indices -- BSE Sensex and NSE Nifty -- each gained nearly 1%, buoyed by positive global cues and strong buying in FMCG stocks. At close, the Sensex rose 769.09 points (0.95%) to 81,721.08, while the Nifty climbed 243.45 points (0.99%) to 24,853.15.
The broader market mirrored the benchmark’s performance, with the BSE Midcap and Small cap indices advancing 0.5% and 0.45%, respectively. Sectorally, Nifty FMCG outperformed, surging 1.6% on the back of upbeat earnings from index heavyweight ITC. Nifty Private Bank and Nifty IT each clocked gains of 1%, while Nifty Bank added 0.8%.
"Markets quickly rebounded after a subdued opening, as short-covering helped benchmark indices stay in positive territory thereafter. The market has been volatile throughout the week, as concerns over US fiscal health due to rising debt and interest rates seen unchanged weighed on sentiment," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.
Vinod Nair, Head of Research, Geojit Investments Limited, said that the FMCG stocks benefited from the early and above-normal monsoon forecast, while IT stocks saw a rebound following a healthy correction. "Optimism around a potentially record-high dividend from the RBI is boosting hopes for fiscal consolidation, reflected in falling Indian bond yields," he added.
Going forward, most analysts believe sentiments to remain bullish, but an emerging trade war between the USA and Europe, and FII outflow may keep the local market under pressure.
“While the US-China trade dispute seems to be settling, US President Donald Trump’s recommendation of a 50% tariff on the European Union (EU), starting June 1, may lead to an escalation in trade tension between two powerful blocs i.e USA and EU. If the EU retaliate and imposes tariffs on US goods, its impact can be felt on global equity markets,” said a senior analyst at a brokerage firm.
Benchmark French stock market index CAC 40 and Germany’s DAX fell sharply between 2 and 3% after Trump recommended the 50% tariff timeline. The United Kingdom’s FTSE also fell more than 1%. US benchmarks Dow Jones, S&P 500 and Nasdaq are also expected to open with sharp cuts on Friday.
Meanwhile, foreign institutional investors (FIIs) have suddenly turned aggressive sellers in the local market, sparking concern among investors. In the first four trading sessions of this week, FIIs offloaded equities worth Rs 15,587 crore - including a massive Rs 10,000 crore selloff on Tuesday and another Rs 5,000 crore exit on Thursday.