Nifty, Sensex Recover From Over 3-Weeks Low In Previous Session, But Risks Remain

Stock Market India: Sensex, Nifty open in the green, recover from sharp slump

Indian equity benchmarks recovered on Tuesday from over three-week lows hit in the previous session even as broader Asia bourses struggled to gain traction, with risks pointing to more downside.

The 30-share BSE Sensex index climbed 488.4 points to 58, 461.02 points in early trade, and the broader NSE Nifty-50 index advanced 154.55 points to 17,467.45 points.

In the benchmark Nifty 50 index, 49 out of 50 stocks traded in the positive territory. The Nifty metals index rose 1.3 per cent, while the bank index gained 1.2 per cent.

From the Sensex pack, Bajaj Finserv, Bajaj Finance, IndusInd Bank, Maruti, Tata Steel, NTPC, UltraTech Cement, State Bank of India and Axis Bank were among the major winners.

Bharti Airtel and Dr Reddy’s were the only laggards.

In the previous session, both the benchmark indexes slumped sharply, by over 1 per cent, driven by broad global risk-off bets.

“Compared to the sell-off in US markets last Friday, the correction in the Indian market yesterday was relatively mild. This is a reflection of the resilience of the Indian market,” V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, told PTI.

“This calls for some caution. There is a possibility of further correction in the market in the near term. Financials, capital goods, autos, telecom and FMCG are strong segments attracting investment,” he added.

The latest setback for investors in a difficult year for investors is Federal Reserve Chair Jerome Powell’s push back against market expectations for a turn to interest-rate decreases next year.

Asian markets fumbled on Tuesday, driven by a decline in Hong Kong and muted sentiment due to the Fed’s commitment to an extended period of restrictive monetary policy to combat inflation.

By mid-morning, the MSCI’s broadest index of Asia-Pacific equities outside of Japan was down 0.4 per cent. In comparison, the Nikkei stock index in Japan increased by over 1 per cent, supported partly by renewed yen weakness.

“The markets are spooked because they are afraid that the Fed could create a hard landing — that they’ll raise rates into a recession, and that will be really painful for the economy and for corporate profits,” Terri Spath, chief investment officer at Zuma Wealth LLC, said on Bloomberg Television.

Minneapolis Fed President Neel Kashkari said sharp stock-market losses show investors have got the message that the US central bank is determined to contain inflation. “People now understand the seriousness of our commitment to getting inflation back down to 2 per cent,” he said.

In addition to interest rates, investors’ top worries centre on the state of the Chinese economy. The benchmark Shanghai Composite Index fell 0.4 per cent in the opening hours of trading.

US futures were volatile following a Wall Street stock market decline that started on Friday when Jerome Powell emphasised the Fed is willing to let the economy suffer by reducing pricing pressures.

“The markets focus for the next couple of weeks at least will be the likely Fed action,” Manishi Raychaudhuri, head of APAC equity research at BNP Paribas, told Reuters.

“Earlier, there was talk of a pivot of a possible cutting of interest rates by the Fed, maybe in 2023 second half or so, but that is now sort of falling by the wayside,” he said. “Higher for longer (interest rate) is possibly the kind of narrative that’s building up,” he added.

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