Stock Market India: Sensex gains over 300 points on Monday
Equity benchmarks recovered on Monday from a bloodbath in the previous session to halt a three-day losing streak, even as risks from looming rate hikes by a slew of central banks at their meetings this week suggest risk-off sentiment in global markets.
The 30-share BSE Sensex index climbed 300.44 points, or 0.51 per cent, to settle at 59,141.23, and the broader NSE Nifty-50 index gained 91.40 points, or 0.52 per cent, to 17,622.25.
“Markets witnessed a smart recovery as Nifty gained traction amid a cautious tone. The recovery was seen even as investors reassess aggressive Fed tightening bets amid looming recession risks,” said Prashanth Tapse, Senior Vice Presidetn for Research at Mehta Equities.
Mahindra & Mahindra, Bajaj Finance, State Bank of India, Hindustan Unilever, Nestle, and Bajaj Finserv were some of the top gainers from the Sensex pack.
The laggards included Tata Steel, ICICI Bank, Power Grid, and ICICI Bank.
“While the undertone of the market remained volatile, a strong relief rally after the recent slump helped benchmark indices to rebound. While European markets and most of the Asian pack continued their downward spiral, the underperformance of the Indian markets last week prompted investors to buy the beaten-down stocks,” said Shrikant Chouhan, Head of Equity Research for Retail at Kotak Securities.
“Despite the recovery, markets may gyrate sharply intra-day amid global uncertainty,” he added.
In anticipation of a busy week of central bank meetings that will see borrowing prices rise globally, with a possibility of a particularly large increase in the US, global shares fell, and the dollar firmed on Monday.
Markets have already factored in a 75 basis point increase in interest rates from the Federal Reserve, with futures pricing in a 20 per cent likelihood of a full percentage point increase.
“Asset performance during this Fed tightening cycle is very different from the norm for other rate hike episodes,” David Chao, Global Market Strategist at Invesco, told Reuters.
“Usually, the Fed tightens when the economy is thriving, and most assets do well. However, most assets have suffered this time, perhaps due to the surge in inflation and abrupt policy change,” he added.
With British markets closed for Queen Elizabeth II’s royal funeral, trading was light on Monday, but tech stocks drove Europe’s STOXX index down 0.5 per cent to its lowest level in two months.
As a result of decreasing tech stocks, MSCI’s broadest index of Asia-Pacific equities outside of Japan, fell 0.6 per cent to hit a fresh two-year low.
Nasdaq futures fell over 0.8 per cent and S&P 500 futures dropped by about 0.7 per cent.
Interest rate hikes are expected elsewhere besides the United States. Most of the banks meeting this week, from Switzerland to South Africa, are likely to raise rates.
