Benchmark indices snap four-day losing streak; Sensex gains 599 points

Benchmarks end the choppy week with over 1.5% losses

Equity benchmark indices snapped their four-day losing streak to end Friday’s session higher amid some short covering and a surge in index heavyweight HDFC Bank. Iran's downplaying of the impact of Israeli strikes also gave some respite to concerns over geopolitical tensions.

The Sensex began the session with losses but gained in the second half to finish at 73,088, with a gain of 599 points or 0.8 per cent. The Nifty rose 151 points to end the session at 22,14,7, up 0.7 per cent. Despite the gains on Friday, both indices finished the week in the red for the first time in three weeks. The Sensex fell 1.6 per cent, and the Nifty tanked 1.7 per cent. Most of the index gains were on account of HDFC Bank, which rose 2.5 per cent. The banking major will announce the results on Saturday.

The escalating tensions between Israel and Iran weighed on most global markets. Israel on Friday launched a retaliatory attack on Iran, less than a week after Tehran's strikes. However, investors sought comfort in Iran's statement that it had no plans for immediate retaliation. The Brent crude, which rose to $90, gave up its gains and was trading at $87 per barrel.

"There was a see-sawing of emotions from the confirmation of attacks by the US and then Iran saying they are not planning to retaliate. Investors are concerned about what will happen over the weekend, so they have squared off positions and are keeping it light. Investors will watch whether the attacks by Israel are done or is it the beginning of their retaliation," said UR Bhat, cofounder of Alphaniti Fintech.

Despite the fears, investors continue to be circumspect about risky assets. It was a gloomy week for the markets after hitting new highs in the previous week. 

Resilient economic data and hawkish statements from the US Federal Reserve forced investors to revise their bets on early rate cuts.

Analysts said sticky inflation would force central banks to stay put on higher rates for longer.

Meanwhile, several Federal Reserve officials, including New York Fed Chairman John Williams, said even a rate hike was possible if warranted. His Atlanta counterpart Raphael Bostic said it would be appropriate to ease towards the end of 2024.

The results season in India will give investors further clues going forward.

"Largecaps could offer solace for investors, given earnings stability. Next week, GDP, PMI, and jobless claims data from the US will provide further insights into the Fed's policy. Additionally, Indian PMI data and Q4 results are anticipated to shape market trends in the coming week,” said Vinod Nair, head of research of Geojit Financial Services.

Market breadth was weak, with 2,127 stocks declining and 1,662 advancing.