Street-smart bulls march on amid West Asia unrest; Sensex up 560 points

Nifty gains 0.9% even as FPI selling continues

Benchmarks indices gained for a second day on Monday as the focus shifted from tensions in West Asia to corporate earnings this week. The Sensex ended the session at 73,649, with a gain of 560 points or 0.8 per cent. Nifty rose 189 points, or 0.9 per cent, to close at 22,336.

The gains came even as foreign portfolio investors (FPIs) sold shares worth Rs 2,915 crore while domestic institutional investors bought shares worth Rs 3,543 crore. Both indices finished the previous week in the red for the first time in three weeks, amid concerns about the Israel-Iran conflict and delayed rate cuts in the US.

The Sensex fell 1.6 per cent, and the Nifty tanked 1.7 per cent. The total market capitalisation of BSE-listed stocks rose by Rs 4.4 trillion to Rs 398 trillion.

Brent crude prices eased to trade around $87 per barrel against $90 last week, as there was no further escalation after Israel's retaliatory strikes last week.

Analysts termed the gains in the last two sessions a recovery rally as investors temporarily recovered from geopolitical issues and shifted their attention to earnings and macroeconomic fundamentals. In the preceding four trading sessions, benchmark indices had dropped over 3 per cent amid Rs 18,600 crore selloff by FPIs.

Investors were forced to rethink their bets last week after a series of US macro data muddled the outlook for the first-rate cuts.

Global equities were mostly higher on Monday.

"On the domestic front, the hope of normal monsoon and above-expected direct tax collection added fuel to the market sentiment. PSU banks witnessed fresh buying today following the news that the Centre may disinvest minority stakes in five public sector banks (PSBs) if they fail to comply with the minimum public shareholding (MPS) norm by raising fresh capital from the market. Stock-specific actions will be seen as we progress into the earnings season,” said Siddhartha Khemka, head of retail research of Motilal Oswal Financial Services.

Despite the rally, investors continue to be circumspect about risky assets. The 10-year US bond yield rose a bit and was trading at 4.6 per cent.

"The recovery was broad-based across sectors, with renewed interest in mid and smallcaps. Gold and oil prices showed some relief but are still at elevated levels. Hawkish remarks from the US Fed, driven by persistent inflation and robust economic data, spurred a rally in bond yields. The prevailing higher interest rate environment is expected to persist longer than expected, which, along with the moderating earnings growth, suggests a continuation of the consolidation in the near term,” said Vinod Nair, head of research of Geojit Financial Services.

Traders will now be tracking the economic data from the US and corporate earnings results from India and abroad for further cues.

The market breadth was strong, with 2,599 stocks advancing and 1,310 declining. Four-fifths of Sensex stocks advanced. ICICI Bank rose 1.9 per cent and was the biggest contributor to Sesnsex gains, followed by Larsen and Toubro, which rose 2.7 per cent.