Sensex rallies 1,300 pts in three days: Here's what is driving the markets

Wednesday's sharp rally came on the back of hopes that the end of the Russia-Ukraine war may be on the horizon as Russia on Tuesday said it would cut down its military operation in Ukraine.

Equity markets surged on Wednesday putting brakes to last week’s volatility as they added on to their meagre gains of the last two sessions. The BSE Sensex rose 740 points to 58,683 levels, while the NSE Nifty50 climbed 172 points closing nearly 17,500 mark. With this, the two indices have logged in gains of 1,300 and 360 points, respectively, since Friday.  

Wednesday’s sharp recovery came on the back of hopes that the end of the Russia-Ukraine war may be on the horizon as Russia on Tuesday said it would cut down its military operation in Ukraine.

On top of that, Brent Crude prices have yet again slipped from recent highs amid expectations of slump in demand, which has lent further support to investors.

Among sectors, the prospects for financials - leading banks, leading housing finance companies, the fintech leaders and select NBFCs - appear bright for FY23 and their valuations are fair, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

"Pharma, housing related segments and telecom majors can lend support to the rally. But the upside to the rally is likely to be capped by profit taking and concerns arising from the hawkish Fed", he added.

Meanwhile, here are the factors in detail that have raised investor sentiment this week: 

Cues on Russia-Ukraine truce: After a number of unfruitful deliberations over the last month, the two sides held face-to-face talks on Tuesday in Turkey, and paved the way for an end to the deadlock. Russia pledged to pull back troops from Ukraine’s capital Kyiv and northern city of ccc in hopes of building mutual trust to advance the peaceful dialogue. This lifted spirits of global markets overnight as US, and European indices closed firmly highly on Tuesday. Ukraine, on the other hand, laid out a framework, agreeing to adapting a neutral status, but also demanding security guarantees from NATO allies.

Meanwhile, the US is still wary of Russia’s claims of de-escalation, as it believes this could only be an attempt at diverting attention. Ukrainian President Volodymyr Zelensky was also quoted as saying that the country will not keep down its guard. Whether Russia's claims of pulling out troops turn out to be true or not remains to be watched.

F&O monthly expiry: Ahead of the monthly F&O expiry on Thursday, investors lapped up heavyweights in the financial and auto space. From these, Bajaj twins, Maruti, M&M, Axis Bank, ICICI Bank and HDFC were the top winners that surged between 1-4 per cent. 

PODCAST: FY23 to set new IPO fundraise record

Portfolio rejig ahead of FY23: Moreover, the equities have registered firm gains with the end of fiscal year 2022 (FY22) in sight. Hence, market participants are rejigging their portfolios before the beginning of the new financial year. The frontline indices – the S&P BSE Sensex and the Nifty 50 – are set to post a double digit return for the second consecutive financial year in 2021-22 (FY22) with a gain of 16 per cent and 18 per cent respectively, but it is the small-caps where all the action was concentrated in the year gone by. Read about it here

Slight ease in Crude prices: Prices of Brent Crude, which has so far been one of the major worries for economies across the world, have come off from their recent highs, registering a sharp fall of around 9 per cent on Monday to $110 a barrel levels. This came amid expectations of ease in demand from China, the second largest crude importer, as the country’s financial hub Shanghai has been put under covid-19 related curbs till around April 5.