 "Markets snap five-day losing streak as geopolitical tensions ease")
Domestic equity markets snapped their five-day losing streak on Monday, buoyed by the easing of geopolitical tensions after Israel's restrained retaliatory attack on Iran which led to a correction in oil prices, and buying in ICICI Bank.
Upbeat results from the country's second-largest private sector lender, which has substantial weight in the benchmark indices, powered the Sensex to its best session in two weeks.
In intra-day trade, the Sensex rose by 1,138 points, or 1.43 per cent, to 80,540. The 30-share index, however, gave up some gains amid profit booking. It finished the session at 80,005, with a gain of 603 points or 0.76 per cent, highest since September 26.
The Nifty 50 index ended the session at 24 339, with a gain of 158 points, or 0.65 per cent, the best single-day gain since October 14. Both indices had ended with losses in the previous five trading sessions amid sustained selling by overseas investors. On Monday, foreign portfolio investors (FPIs) sold shares worth Rs 3,228 crore, extending the monthly selling to Rs 92,000 crore.
ICICI Bank, which rose 2.96 per cent, accounted for a third of gains for both the Sensex and the Nifty. The lender on Saturday reported a 14.5 per cent year on year (Y-o-Y) increase in net profit at Rs 11,746 crore in the July–September quarter of the current financial year (Q2FY25), aided by healthy growth in non-interest income, fee income, and treasury gains. Analysts at Bloomberg had estimated a net profit of Rs 10,952 crore.
"The trend of flight to quality is likely to be sustained, given the good numbers from banking majors like HDFC Bank and ICICI Bank, where valuations remain fair. Investors can profit from these polarised valuations,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
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The Sensex and the Nifty had been on a decline in the last four weeks, propelled by sustained selling by FPIs and earnings disappointments from top companies. Concerns over high valuations further accelerated the selling.
A palpable sense of relief was seen amongst investors as Israel's retaliatory strikes against Iran excluded its nuclear and oil facilities. The Brent crude declined by 6.3 per cent and was trading at $71. Brent had risen over 4 per cent to $76 a barrel last week in the wake of tensions between Israel and Iran.
"The global market structure may turn favourable after the subdued Israeli strikes against Iran avoiding the Iranian oil fields which have resulted in a sharp drop in crude prices. The imminent US presidential elections and the uncertainty associated with that will continue to weigh on markets," said Vijayakumar.
The remainder of corporate results in India, macro data from the eurozone and the US, and the outcome of the US presidential elections are expected to determine the market trajectory in the near term.
“We expect the truncated week to remain sideways amid a mixed Q2 season, monthly F&O expiry, and continued selling by FPIs," said Siddhartha Khemka, head of research and wealth management at Motilal Oswal Financial Services.
The market breadth was positive with 2,524 stocks gaining and 1,475 declining on the BSE. Apart from ICICI Bank, M&M and Infosys also contributed to Sensex gains.
Besides ICICI Bank, other top-gaining Nifty 50 components were Shriram Finance, which rose 5.4 per cent after reporting an upbeat profit, and Sun Pharma, which rose 2.3 per cent, after its quarterly profit beat analysts' estimates.