Sensex, Nifty snap 6-day losing streak: Factors behind today's rebound
BSE's Sensex jumped more than 634 points, or 1.01 per cent, to settle at 63,782.80, while NSE's Nifty50 gained 190 points, or 1.01 per cent, to end the day at 19,047.25 for the day.
- Oct 27, 2023,
- Updated Oct 27, 2023 5:59 PM IST
Domestic equity market snapped the six-day losing streak and settled with big gains on Friday. Low-level buying across the board supports the relief rally in the markets. Traders lapped up towards beaten down quality stocks. However, investors remained cautious ahead of RIL's results and US economic data due later in the day.
BSE's Sensex jumped more than 634 points, or 1.01 per cent, to settle at 63,782.80, while NSE's Nifty50 gained 190 points, or 1.01 per cent, to end the day at 19,047.25. Broader markets outperformed the headline peers as the BSE midcap and smallcap indices rose about 2 per cent each. However, fear gauge India VIX dropped sharply over 7 per cent to 10.91-levels.
The domestic market recovered well compared to yesterday’s sharp corrections, due to restrained FIIs selling along with moderation in currency and global bond yield volatility, said Vinod Nair, Head of Research at Geojit Financial Services.
"Till date, the Q2 results outcome is decent, which is in-line with the buoyant estimate. Yet, the market is not enthusiastic as we are at the cusp of an earnings downgrade in anticipation of further slowdown in the world economy due to elevated interest rate and geopolitical risk," he said.
Buying was seen across all the sectors with NSE's PSU Bank index rising more than 4 per cent for the day. The market capitalization of all listed companies on BSE increased by Rs 4.54 lakh crore to Rs 310.58 lakh crore. Here are the key factors that pushed the markets higher on Friday:
JP Morgan upgrades India
Global brokerage firm JP Morgan upgraded India equities to 'overweight' from 'Neutral' earlier. The overseas brokerage firm suggested investors use any near-term correction as an opportunity to add and leverage on a positive historical seasonality to general elections. The global brokerage said India offers the strongest emerging market nominal GDP compounding.
Eased down US Treasury yields
The yield on the 10-year US Treasury took a breather and hovered around 4.845 per cent after scaling 5 per cent earlier in the week. The bond yields move inversely to the price of the debt security and equity markets. It functions as a benchmark for global borrowing costs.
Rising Global Markets
Global shares rose on Friday after data showed the US economy was growing robustly and traders awaited a US core inflation report later in the session that may show price pressures are continuing to abate. MSCI's all-country equity gauge rose 0.2 per cent. The US economy expanded at its fastest rate for almost two years in the September 2023 quarter.
Signs of Ceasefire
Hamas signalled a tone down in the ongoing conflict with Israel. A Hamas official tied the release of hostages held in Gaza to a ceasefire in Israel's punishing air war in the enclave, launched after a deadly rampage by Hamas militants into southern Israel nearly three weeks ago. Countries across the globe are urging Israel to hold troops and delay the ground operations.
Markets ended their 6-day losing streak as Nifty reclaimed the psychological 19000 mark on the back of broad-based buying support. Despite the strong rebound, we suspect the benchmarks are not out of the woods yet. For markets to remain buoyant, some resolution is needed between the on-going Israel-Hamas war, said Prashanth Tapse, Senior VP (Research), Mehta Equities.
Rebound in Indian Rupee
The rupee paused its three-day slide and inched up 2 paise to 83.23 against the US dollar in early trade on Friday amid positive cues from the domestic equity markets and a weak American currency overseas. At the interbank foreign exchange market, the local unit opened at 83.24 and gained further to reach 83.23 against the greenback, up 2 paise from its previous close.
Strong Q2 earnings
About half a dozen Indian blue-chip companies were lined up to announce their results for September 2023. While the behemoth, Reliance Industries put a hold on results during the market hours, others including Cipla, Maruti Suzuki, Bajaj Finserv, Dr Reddy's Laboratories and SBI Life Insurance Company reported a strong performance in the second quarter.
Technical
Markets were in an oversold zone after a 6-session fall and investors were already anticipating a relief rally soon, said Amol Athawale, Vice President - Technical Research, Kotak Securities.
"Nifty has formed a long bearish candle, indicating strong possibility of further weakness from the current levels. As long as the index is trading above 18,900, the pullback rally is likely to continue till 19200-19275. On the flip side, below 18,900, the selling pressure is likely to accelerate and could slip till 18800. Further down side may drag the index till 18,700," he said.
Domestic equity market snapped the six-day losing streak and settled with big gains on Friday. Low-level buying across the board supports the relief rally in the markets. Traders lapped up towards beaten down quality stocks. However, investors remained cautious ahead of RIL's results and US economic data due later in the day.
BSE's Sensex jumped more than 634 points, or 1.01 per cent, to settle at 63,782.80, while NSE's Nifty50 gained 190 points, or 1.01 per cent, to end the day at 19,047.25. Broader markets outperformed the headline peers as the BSE midcap and smallcap indices rose about 2 per cent each. However, fear gauge India VIX dropped sharply over 7 per cent to 10.91-levels.
The domestic market recovered well compared to yesterday’s sharp corrections, due to restrained FIIs selling along with moderation in currency and global bond yield volatility, said Vinod Nair, Head of Research at Geojit Financial Services.
"Till date, the Q2 results outcome is decent, which is in-line with the buoyant estimate. Yet, the market is not enthusiastic as we are at the cusp of an earnings downgrade in anticipation of further slowdown in the world economy due to elevated interest rate and geopolitical risk," he said.
Buying was seen across all the sectors with NSE's PSU Bank index rising more than 4 per cent for the day. The market capitalization of all listed companies on BSE increased by Rs 4.54 lakh crore to Rs 310.58 lakh crore. Here are the key factors that pushed the markets higher on Friday:
JP Morgan upgrades India
Global brokerage firm JP Morgan upgraded India equities to 'overweight' from 'Neutral' earlier. The overseas brokerage firm suggested investors use any near-term correction as an opportunity to add and leverage on a positive historical seasonality to general elections. The global brokerage said India offers the strongest emerging market nominal GDP compounding.
Eased down US Treasury yields
The yield on the 10-year US Treasury took a breather and hovered around 4.845 per cent after scaling 5 per cent earlier in the week. The bond yields move inversely to the price of the debt security and equity markets. It functions as a benchmark for global borrowing costs.
Rising Global Markets
Global shares rose on Friday after data showed the US economy was growing robustly and traders awaited a US core inflation report later in the session that may show price pressures are continuing to abate. MSCI's all-country equity gauge rose 0.2 per cent. The US economy expanded at its fastest rate for almost two years in the September 2023 quarter.
Signs of Ceasefire
Hamas signalled a tone down in the ongoing conflict with Israel. A Hamas official tied the release of hostages held in Gaza to a ceasefire in Israel's punishing air war in the enclave, launched after a deadly rampage by Hamas militants into southern Israel nearly three weeks ago. Countries across the globe are urging Israel to hold troops and delay the ground operations.
Markets ended their 6-day losing streak as Nifty reclaimed the psychological 19000 mark on the back of broad-based buying support. Despite the strong rebound, we suspect the benchmarks are not out of the woods yet. For markets to remain buoyant, some resolution is needed between the on-going Israel-Hamas war, said Prashanth Tapse, Senior VP (Research), Mehta Equities.
Rebound in Indian Rupee
The rupee paused its three-day slide and inched up 2 paise to 83.23 against the US dollar in early trade on Friday amid positive cues from the domestic equity markets and a weak American currency overseas. At the interbank foreign exchange market, the local unit opened at 83.24 and gained further to reach 83.23 against the greenback, up 2 paise from its previous close.
Strong Q2 earnings
About half a dozen Indian blue-chip companies were lined up to announce their results for September 2023. While the behemoth, Reliance Industries put a hold on results during the market hours, others including Cipla, Maruti Suzuki, Bajaj Finserv, Dr Reddy's Laboratories and SBI Life Insurance Company reported a strong performance in the second quarter.
Technical
Markets were in an oversold zone after a 6-session fall and investors were already anticipating a relief rally soon, said Amol Athawale, Vice President - Technical Research, Kotak Securities.
"Nifty has formed a long bearish candle, indicating strong possibility of further weakness from the current levels. As long as the index is trading above 18,900, the pullback rally is likely to continue till 19200-19275. On the flip side, below 18,900, the selling pressure is likely to accelerate and could slip till 18800. Further down side may drag the index till 18,700," he said.