Markets snap six-day losing streak; Sensex ends 635 points higher

Nifty ended the session at 19,047, with a gain of 190 points or 1.01 per cent

Equity benchmark indices Sensex and Nifty on Friday reversed their six-day losing streak as US bond yields eased following weaker-than-expected inflation data.

Renewed buying interest after a near 5 per cent drop saw the domestic equity benchmarks post their best single-day gain in nearly four months.

The Sensex ended the session at 63,783, gaining 635 points or 1.01 per cent.

Nifty ended the day at 19,047, reporting a gain of 190 points or 1.01 per cent.

For both the indices, this was the best day since June 30.

For the week, however, the Sensex and Nifty declined by 2.5 per cent, the steepest fall since September 24, 2023.

The US 10-year bond yield eased overnight, trading at 4.86 per cent.

The bond yields fell amid renewed hopes of a soft landing of the US economy.

The US gross domestic product (GDP) grew at a 4.9 per cent annualised rate in the previous quarter, the fastest in nearly two years.

At the same time, the personal consumption expenditures price index cooled down to 2.4 per cent, the slowest since 2020.

The latest US economic data renewed hopes of inflation easing without leading to recession.

The US Treasury Secretary Janet Yellen said the macro numbers show the economy is doing well.

“We have what looks like a soft landing, with very good outcomes for the US economy,” Yellen said. 

Crude oil prices rose 1.6 per cent, and were trading at $89.7 after the US struck Iran-linked facilities in Syria.

The solid earnings of Amazon and Intel brought more cheer to the global markets.

Several big US and European companies have recently raised concerns about an uncertain economic environment in their earnings announcements.

There was also some buying interest from value-seekers after the sharp declines this week.

JP Morgan on Thursday gave an ‘overweight’ rating to India, and asked investors to use the current correction as an opportunity to ‘buy’.

In recent weeks, the CLSA and Nomura have also upgraded Indian equities.

“The market is on a roller coaster ride, characterised by the long-anticipated correction in recent trading sessions. On a positive note, valuations in India, which had been high, have now adjusted to more reasonable levels. In sectors like banking, valuations have become attractive,” said Trivesh D, COO of Tradejini.

The renewed optimism notwithstanding, investors continue to be vigilant about the trajectory of US bond yields and the situation in West Asia.

On Friday, the Israeli military said it killed Hamas's deputy head of intelligence, whom it held responsible for the October 7 attack.

The Israeli army also made a limited raid on Northern Gaza. Meanwhile, Iran's foreign minister said that the US won't escape unscathed if Israel-Hamas becomes a broader conflict.

Foreign portfolio investors (FPIs) sold shares worth Rs 1,500 crore on Friday, extending their month to date selling to over Rs 16,000 crore. 

“Today’s recovery is a dead cat bounce. It was certainly in the offing. Of course, some of the earnings have been satisfactory. But this market needs more than positive earnings to move up. FPI selling continues to be aggressive. If the FPIs sell like this, it’s only a matter of time before domestic investors also look at stocks with some caution,” said UR Bhat, co-founder of Alphaniti Fintech.

The market breadth was strong, with 2,825 stocks advancing and only 838 declining.

Reliance Industries rose 1.7 per cent ahead of its earnings report – the biggest contributor to the gains made by Sensex.