Benchmark indices staged a strong recovery on Monday after their longest weekly losing streak in 25 years, with banking and financial stocks leading gains. Easing crude oil prices, softer-than-expected US jobs data and reduced expectations of an aggressive Federal Reserve stance also supported sentiment.
The Sensex ended at 72,382.47, up 472.77 points or 0.66%. The index opened at 72,340.95 and touched an intraday high of 72,631.93. The Nifty 50 closed at 22,555.75, up 133.80 points or 0.60%. It opened at 22,532.40 and touched a high of 22,621.80.
The rebound comes after both the Sensex and Nifty logged their eighth straight weekly decline last week, with foreign selling, elevated crude prices and rising global bond yields weighing on Indian equities.
BANKING, FINANCIAL STOCKS LEAD RECOVERY
Banking and financial stocks were among the biggest drivers of Monday’s recovery. The Nifty Financial Services 25/50 index gained 0.46%, while the PSU Bank index rose 0.97% and the private bank index edged up 0.08%.
Among Sensex stocks, Bajaj Finance rose 2.28%, Bajaj Finserv gained 0.87%, SBI advanced 0.52%, Axis Bank climbed 0.82% and ICICI Bank rose 2.11%. Reliance Industries also gained 1.72%.
The gains came after several financial companies reported positive quarterly business updates.
Bajaj Finance rose 2.28% after reporting 11% year-on-year growth in new loans during the September quarter. Punjab National Bank gained 2.5% after reporting 14.8% growth in global advances, while Bank of Baroda rose 0.9% after its quarterly advances grew 18%.
Mahindra & Mahindra Financial Services also gained after reporting a 22% jump in overall disbursements during the September quarter.
HDFC Bank, however, ended 1.99% lower despite remaining in focus after the lender appointed Anup Bagchi as its next MD and CEO for a three-year term.
ITC, FMCG STOCKS JUMP
ITC was the top Sensex gainer, rising 4.49% after Citi double-upgraded the stock to “buy” from “sell”. The move lifted the Nifty FMCG index by 1.80%.
Eternal also gained 2.50%, while Bharti Airtel rose 2.38% and Adani Ports advanced 2.13%.
TCS gained 1.40%, while Reliance, L&T, NTPC, Titan, Maruti and Power Grid also ended higher.
CRUDE OIL EASES
A pullback in crude oil prices provided another positive trigger for Indian markets. WTI crude was down 0.56% at $90.60 per barrel, while Brent was at $102.47, up marginally by 0.22%.
The recent fall in oil prices has helped ease some concerns around inflation, India’s import bill and corporate margins.
Market sentiment also improved after softer-than-expected US jobs data reduced expectations of a Federal Reserve rate hike later this month, offering some relief to emerging-market assets.
Kruti Shah, quant analyst at Equirus Securities, said Indian markets were at a crossroads, with domestic liquidity competing with a difficult global macro backdrop. She added that mean reversion was already underway across large- and mid-caps, with crude prices, global yields and liquidity remaining key variables for the market.
BROADER MARKET ALSO GAINS
The recovery was broad-based, although gains were stronger in some pockets. The Nifty 100 rose 0.55%, Nifty 200 gained 0.57% and Nifty 500 advanced 0.52%.
The Nifty Midcap 100 rose 0.67%, while the Nifty Midcap 50 gained 0.42% and Nifty Smallcap 100 rose 0.47%.
Among sectors, FMCG gained 1.80%, consumer durables rose 1.53%, mid-small IT and telecom advanced 1.48%, financial services ex-bank gained 1.26% and mid-small financial services rose 1.07%.
However, healthcare fell 1%, pharma declined 0.74% and mid-small healthcare dropped 1.11%. Nifty IT was almost flat, declining 0.01%.
RBI POLICY, EARNINGS NOW IN FOCUS
The market’s attention will now turn to the Reserve Bank of India’s monetary policy decision and the upcoming earnings season.
Vinod Nair, Head of Research, Geojit Investments Limited, said the recovery was supported by softer US jobs data and moderation in crude oil prices, but investors were still watching global risks.
“Markets staged a recovery, supported by softer-than-expected U.S. jobs data and a moderation in crude oil prices, providing some relief to investors assessing the near-term interest rate outlook,” Nair said.
He added that elevated crude prices, higher bond yields and currency risks remain concerns, while the RBI policy and upcoming earnings will be key triggers.
“The market is nearing an important juncture; a rebound is likely; however, the current risk-off sentiment may tempt investors to book profits until a fresh catalyst emerges,” Nair said.
The RBI Monetary Policy Committee began its meeting on Monday, with the central bank widely expected to raise the policy rate by 25 basis points on October 7. The rate decision has already been largely priced in by markets, according to Nair.
FII SELLING REMAINS A KEY RISK
Despite Monday’s rebound, foreign selling remains a major overhang for Indian equities.
Foreign portfolio investors sold shares worth Rs 9,484.22 crore on Thursday, their sixth straight session of selling, according to provisional NSE data. Domestic institutional investors bought equities worth Rs 10,041.84 crore.
The sharp recovery therefore offers some relief after eight weeks of losses, but the market will need sustained easing in crude prices, global bond yields and foreign outflows for the rebound to turn into a stronger recovery.
