Stocks rebound as headwinds ease, Sensex ends 0.8% up at 59,678 points

Investors were rattled the past few weeks due to prospects of higher inflation and reduced stimulus. A likely deal between US lawmakers to boost US debt limit into December calmed nerves

Indian markets recouped most of the losses made in the previous session as investor sentiment improved as concerns around US debt ceiling, inflation and surging energy prices eased.

The benchmark Sensex ended the session at 59,678, with a gain of 488 points, or 0.8 per cent. The Nifty, on the other hand, rose 144 points to end the session at 17,790, a gain of 0.8 per cent. The indices had lost close to a per cent on Wednesday.

Investors were rattled in the past few weeks due to a wall of concerns, including prospects of higher inflation and reduced stimulus. The prospect of a deal between US lawmakers to boost the US debt limit into December helped soothe nerves. The US Senate appeared to be moving closer to a temporary deal to avert a federal debt default in the coming weeks after the Democratic party said they would accept a Republican proposal to defuse the standoff.

Analysts said the jobs data in the US that will be out on Friday would give clarity on the Federal Reserve's bond purchases tapering timeline.

Crude oil prices came off from their seven-year high after Russia's offer to ease Europe's energy crisis. The Brent crude was trading $80.6 per barrel.

European equities rebounded after an ECB official said that investors should not expect premature hikes from the central bank.

“Global markets got back their positive mojo with fall in US bond yields and oil price. Also, the progress over the US debt ceiling deal between the Democrats and Republicans aided sentiment,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

Analysts said markets will now take cues from Fed taper timelines, RBI Monetary Policy Committee (MPC) announcements and corporate results. They added that the MPC sounding cautious and moving away from an accommodative monetary policy could be an area of concern.

India Inc will kick off their September quarter results season from Friday, with India’s second-most value firm TCS first off the block. Analysts are expecting significant growth in earnings to justify premium valuations.

Experts said that Moody's Investors Services upgrade in the backdrop of persistent improvement in key economic indicators and faster ramp-up in vaccination bodes well for the economy. It may aid India to remain resilient compared to global equities. The high-frequency key economic indicators in September in the form of GST collection, manufacturing PMI, import-export data and e-way bills continued to reflect improvement in economic activities, which bode well for corporate earnings. And growth in many cases started surpassing pre-pandemic levels, which also offers comfort

"Steady rise in disbursal of banks and NBFCs in 2QFY22 (as shown in their provisional numbers reported to exchanges) vindicates growth momentum of the economy. However, a sharp rise in oil prices is a fresh overhang of Indian equities, which can essentially result in further hardening of inflation and adversely impact government's fiscal math,' said Binod Modi, head strategy Reliance Securities.

The market breadth was positive, with 2,216 stocks advancing and 1,084 declining. Three hundred and two stocks hit their 52 weeks high, and 458 were locked on the upper circuit on BSE.

Realty and consumer durables stocks gained the most, and indices rose 6 and 5.8 per cent, respectively.