Rally returns: Sensex and Nifty rise to two-month high as FPIs return

The equity markets started the new financial year with a bang, with the frontline indices Sensex and Nifty50 climbing 1.2 per cent to their highest levels in the past two months. Positive global cues, a retreat in oil prices, and aggressive buying by overseas investors supported stock prices, even as concerns remained around the policy tightening by the US Fed and the Russia-Ukraine war.

The Sensex rose 708.2 points, or 1.2 per cent, to end at 59,277 – the highest closing level since February 2. The Nifty50 rose 206 points, or 1.2 per cent, to end at 17,670. Both indices gained more than 3 per cent during the week and once again moved into positive territory as far as CY22 returns are concerned. Oil prices retreated on a move by the US government to release reserves to tackle rising costs. Brent crude prices have dropped 12 per cent during the week. They hovered around $105 a barrel.

Foreign portfolio investors (FPIs) bought shares worth Rs 1,910 crore on Friday. A day earlier, they had pumped in Rs 3,089 crore. “The decline in crude oil prices and de-escalating Russia-Ukraine conflict is driving the positive sentiment. Even India VIX is now below 20 levels and is further supporting the positive momentum. After a long stretch of underperformance — attractive valuations and hopes of a resolution in the war is creating interest in sectors like media, realty, financials, auto, and private banks,” said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.

Russia’s invasion of Ukraine led to a disruption in global supply chains, leading to a sharp jump in commodity, fuel, and food prices. The benchmark Sensex came off 14 per cent, from its 2022 highs, in early March to touch a low of 52,843. Since then, the market has seen a stunning recovery with the Sensex climbing 12 per cent within a month.

“The stock market has kicked off FY23 on a positive note. The Cabinet approval for mega power policy, a decline in crude prices, and improvement in global futures ignited the rally. The Russia-Ukraine war, crude, and RBI monetary policy meetings would be the major factors that will dictate the near trend," said Vinod Nair, head of research, Geojit Financial Services.