Equity benchmarks rose on Monday, defying a broader sell-off in stocks on risks for a global economy already dealing with rising inflation and a wave of monetary tightening increased as a result of the Europe’s increasing energy crisis.
The 30-share BSE Sensex index climbed 442.65 points to end at 59,245.98 and the broader NSE Nifty-50 index gained 126.35 points to 17,665.80.
“Benchmark indices outperformed their Asian peers and also shrugged off the weak European market sentiment as investors bet on metals, banking & capital goods stocks. Cautious optimism prevailed as there are enough indications that markets may remain volatile in coming sessions on global slowdown fears,” said Shrikant Chouhan, Head of Equity Research for Retail at Kotak Securities.
After the worst week for global shares since June, Wall Street stock futures wavered, even as US markets – stocks and cash Treasuries – are closed on account of Labor Day.
European stocks and the euro sank on Monday from gas prices surging by 30 per cent.
This winter, Europe is frantically trying to avert an energy calamity that might spark an additional economic and financial crisis after Russia said gas supply down its main pipeline to the region would stay shut.
The 47-country MSCI world equity index fell 0.5 per cent on the day. The STOXX 600 in Europe was down 1.5 per cent and near a seven-week low.
The FTSE 100 in London was down 0.8 per cent, and the DAX in Germany fell 2.9 per cent.
In spite of the deteriorating picture for the global economy due to issues like power shortages, monetary authorities, including the European Central Bank, are expected to keep raising interest rates this week to combat inflation.
“It is more clear now to everybody that Europe will go into recession and we have also witnessed some protests over the weekend and different single government interventions ahead of the EU proposal which will be voted on Friday,” Alberto Tocchio, a portfolio manager at Kairos Partners, told Bloomberg.
European Union equities “will possibly test the lows made in July with a potential break over the next hours or days,” he said.
An Asian equity index also fell, led by declines in Hong Kong, where tech shares fell as traders assessed the possibility of US investment restrictions.