Indices bounce back after four-day fall; NTPC gains over 4%, SBI rises 2.5%

The benchmark indices gained on Monday after four days of continuous decline, as investors waiting on the sidelines bought stocks despite weak global cues. Gains in heavyweights like Reliance Industries, TCS, and other IT and banking majors helped the indices close higher. 

Optimism regarding the September quarter earnings and hopes of the continuation of a dovish monetary policy tickled investors’ enthusiasm.

The Sensex ended the session at 59,299, a gain of 533 points or 0.9 per cent. The Nifty50, on the other hand, closed at 17,691, up 159 points or 0.9 per cent.

“Indian equities rebounded after witnessing selling pressure over the past four days ahead of the RBI MPC meeting and earnings season, which is due to start this week,’ said Siddhartha Khemka, head of retail research Motilal Oswal Financial Services.

Vinod Nair, head of research, Geojit financial services, said the momentum is driven by expectations of better second-quarter earnings backed by recovery in economic activity, the second wave fallout not being severe, and anticipation of a better outlook from festival demand. 

“The IT sector was under consolidation before the start of quarterly results. This led to a marginal uptick as major companies are scheduled to announce their results which can emerge as an opportunity if the results are in line with the robust outlook,” said Nair.

Meanwhile, European stocks fell amid concerns about slowing growth and high inflation. Investors have become wary of risky assets as recovery faces hurdles due to commodity shortages, an energy crunch, and persisting inflation. The Federal Reserve’s decision to start unwinding in the bond purchase programme is not helping sentiment either.

The Asian markets were mixed on Monday, with Hong Kong’s benchmark down more than 2 per cent after troubled property developer China Evergrande’s shares were suspended from trading. The markets were closed for holidays in Shanghai and South Korea. 

“Domestic cues remain positive as economic activities gain momentum but elevated valuations, along with multiple global concerns, will keep the markets volatile. RBI credit policy and TCS quarterly results are the two key events that will be widely tracked. The RBI is expected to maintain its policy rates but it may lay the roadmap for stimulus tapering in line with other central banks. TCS would mark the start of the Q3FY22 earnings season, which is expected to continue the strong earnings momentum,” said Khemka.

The market breadth was positive, with 2,327 stocks gaining and 1,045 declining on the BSE. As many as 316 stocks hit their 52-week high, and 537 hit the upper circuit. 

Four-fifths of the Sensex constituents gained. NTPC was the best performing Sensex stock and gained 4.08 per cent. Bajaj Finserv gained 3.6 per cent, SBI gained 2.5 per cent, and Bajaj Finance surged 2.3 per cent.

Barring one, all sectoral indices gained. Metal and power stocks gained the most, and their gauges rose 2.6 and 2.3 per cent, respectively.

Tech stocks battered in US (Bloomberg)

US stocks declined as a selloff in technology stocks resumed amid the threat of persistently high inflation. The S&P 500 fell more than 1 per cent — dipping below its 100-day moving average — while the Nasdaq 100 fell more than 2 per cent. 

The losses were led by high-growth technology companies — including Amazon and Facebook — while vaccine makers were also lower on Merck & Co’s announce­ment about an effective Covid-19 drug. Energy and materials stocks, mean­while, were higher along with comm­odity prices. 

“There’s a wall of worry that markets are trying to climb at the moment,” said Deutsche Bank strate­gist Jim Reid.