Benchmark equity indices Sensex and Nifty closed over 1% higher on Wednesday, led by banking, metal and IT stocks, as global markets eased concerns about a US recession.
The BSE benchmark Sensex advanced 875 points or 1.11% to settle at 79,468. The broader NSE Nifty gained 305 points or 1.27% to end at 24,297.
The market capitalisation of all listed companies on the BSE surged by Rs 9.07 lakh crore to Rs 448.66 lakh crore.
Among Sensex stocks, HDFC Bank, Infosys, L&T, ITC, Reliance Industries, and ICICI Bank were the main contributors to the index’s rise. Power Grid, M&M, SBI, and Axis Bank also supported the upward movement.
Sector-wise, Nifty Auto, Financial, FMCG, IT, Media, Metal, Pharma, Realty, Healthcare, and Oil & Gas surged 1-2%. Meanwhile, the fear gauge India VIX declined 8.6% to 17.12.
Realty stocks rallied up to 3.3% after the reports that the government might move an amendment in the Finance Bill allowing taxpayers to select either 12.5% LTCG taxes without indexation or 20% LTCG with indexation for property bought before July 23, 2024. Oberoi Realty, DLF, and Lodha were the top gainers.
Finance Minister Nirmala Sitharaman is expected to present the amendment later in the day.
Here are top factors aiding the rally today:
1) BOJ’s stability assurance
Bank of Japan (BOJ) Deputy Governor Shinichi Uchida announced on Wednesday that the central bank would refrain from raising interest rates during periods of financial market instability. This statement helped ease concerns about potential tightening in the monetary policy.The reassurance from the BOJ is seen as a positive signal for global equity markets, as it indicates a more cautious approach to rate hikes. Following the announcement, the dollar surged 1.6% to 146.65 yen, recovering from the 141.675 low earlier in the week, though it remains below its July peak of 161.96.
“Global markets experienced a notable rebound after the BoJ’s Deputy Governor reassured that the central bank would not raise interest rates during a period of financial instability. The carry trade issue appears to have been eased for now and the focus is on the ongoing RBI policy, which is likely to hold the rate and positive economic outlook,” said Vinod Nair, Head of Research, Geojit Financial Services.
2) US recession fears ease
Fears of an imminent U.S. recession had also faded a little as the run of economic data still pointed to solid economic growth in the current quarter. The Atlanta Fed’s much-watched GDPNow estimate is that gross domestic product is running at an annual pace of 2.9%. This resilience in the U.S. economy is positive for global equity markets.
3) Domestic buying
Domestic institutional investors (DII) continued their buying spree on Tuesday, purchasing equities worth Rs 3,357 crore. This follows their earlier purchase of Rs 9,155 crore on Monday.
“Even though FIIs were big sellers in India in the cash market during the last three days, their selling is being matched by DII buying. This countervailing investment by DIIs can impart resilience to the market,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
4) Global market rally
Indian equities mirrored global market gains on Wednesday, buoyed by strong performances in European and Asian markets. Japan’s Nikkei led the surge after the Bank of Japan unexpectedly adopted a cautious stance on rate hikes amid market volatility, leading to a weaker yen. This positive global momentum, with Europe’s Stoxx 600 index rising 0.8% and Nasdaq futures up 0.9%, helped propel Indian markets higher, extending the positive trend.
5) Oil prices near multi-month lows
Oil prices crept higher on Wednesday, though Brent still languished near seven-month lows, pressured by concerns over weak demand and fears of recession in the United States.
Brent crude prices fell over 11% to $76.9 in the past four weeks. This drop in oil prices has positively influenced market sentiment, as it could ease global inflationary pressures.
