Markets rebound after two-day slump; Sensex ends 491 points higher

HDFC Bank, which rose 1.03 per cent, contributed the most to Sensex gains, followed by Bajaj Finance, 4.4 per cent, and Infosys, which rose 1.5 per cent

The equity benchmark indices rebounded on Thursday after sliding for the past two sessions, propped up gains in finance majors and robust foreign portfolio investor (FPI) buying.

The Sensex ended the session at 71,848, gaining 491 points or 0.7 per cent. The Nifty50 climbed 141 points or 0.6 per cent to settle at 21,659.

HDFC Bank, which rose 1.03 per cent, contributed the most to the gains made by the Sensex, followed by Bajaj Finance, 4.4 per cent, and Infosys, which rose 1.5 per cent.  

The stock of Bajaj Finance rose after the company posted robust December quarter numbers. Bajaj Finance reported a 26 per cent jump in new loans booked during the December quarter compared to the same time in the last financial year.

“Impressive quarterly business updates from financial heavyweights lifted domestic equities today despite weak global cues. Overall market showed strong resilience today, which is likely to strengthen further as we head into the result season and more companies announce their business updates,” said Siddhartha Khemks, head of retail research of Motilal Oswal Financial Services.

Foreign Portfolio Investors (FPIs) were the net buyers to the tune of Rs 1,513 crore.

The broader markets gained more, and the Nifty Midcap 100 hit a new high and ended the session at 47,310, a gain of 1.7 per cent. The Nifty Midcap 100 has hit new highs in three sessions this week.

“Lakhs of new investors are coming to the market and lapping up mid and small-cap shares. Today, we see companies with elevated valuations getting bought. There is no fundamental reason for many of these stocks to rise,” said Chokkalingam. G, Founder of Equinomics.

There was a bit of profit-taking in the Indian equities this week after a rally last year, which saw the Nifty rise 20 per cent and Sensex surge 18.7 per cent.

The equity markets rallied the previous year on the back of hopes of the Federal Reserve cutting interest rates by March, robust macro and corporate earnings numbers and hopes of policy continuity after the general elections in May 2024.

Market trajectory this year will be heavily dependent on rate cuts pan out. The minutes of the Federal Open Market Committee (FOMC) meeting in December, which was released this week revealed that its members agreed on maintaining a restrictive stance for some time while acknowledging that the rates have peaked.

The FOMC members reaffirmed a restrictive stance until inflation declines sustainably.

The rising tensions in the Middle East have also raised investor concerns about rising commodity prices, throwing a spanner on rate cuts.

Iran on Wednesday said attacks that killed almost 100 people in the central part of the country were carried out to punish its stance against Israel. The Brent crude on Thursday was trading at $78.57,  a 0.9 per cent gain.

Higher oil prices hurt India as it imports three-fourths of its crude oil requirements.