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Sensex posts a rebound as India Inc, US and Asia lift stocks

The market has been quite volatile in the last one week on global cues but now that the corporate earnings season is about to begin, analysts expect the sentiment to improve

NOIDA / October 04, 2022 / 10:58 AM IST

Benchmark indices reversed gear to post a rebound on October 4, buoyed by upbeat quarterly updates by India Inc and heavy buying in the US and Asian markets. Declining dollar and US bond yield also lifted sentiment.

The market has been quite volatile in the last one week on global cues but now that the corporate earnings season is about to begin analysts are expecting the sentiment to improve.

The 30-share flagship BSE Sensex rose 1,080 points or 1.90 percent to 57,869. Its broader peer Nifty 50 climbed 338 points or two percent to 17,225. Broader indices also traded higher but underperformed headline indices.

“We expect (the Nifty50) index to sustain above the psychological mark of 17,000,” said analysts at ICICI Securities.

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Market breadth favoured gainers. In the Nifty 50, 48 stocks gained led by IndusInd Bank, Bajaj Finance, Hindalco Industries, and TCS. Only two losers were PowerGrid and Dr Reddy’s Labs.

VK Vijayakumar, chief investment strategist at Geojit Financial Services, said the risk-off, risk-on texture of the market is in response to fast changing economic and market signals.

“For the near term, market sentiments have turned positive with a declining trend in dollar and US bond yields,” he said. “If this trend continues, foreign institutional investors (FIIs) will again turn big buyers in India and they will not get stocks cheap. Financials and autos are again set to lead the uptrend since their fundamentals and prospects are strong. Capital goods are likely to join the rally and telecom is on a strong wicket."

Here are the factors popping the markets higher:

Upbeat updates

Ahead of the September quarter earnings season, encouraging quarterly updates from companies lifted sentiment. Companies from various sectors reported stable growth that led to market-wide buying.

IndusInd Bank shares rose 5.7 percent after it said second-quarter net advances rose 18 percent year on year. Shares of Mahindra and Mahindra Financial Services surged 10 percent after the company reported strong disbursement for September and improved collection efficiency.

Asian markets

Asian indices rose with up to three percent gains led by Nikkei. South Korea and Taiwan were other big gainers. Apart from the above mentioned factors, Asian stocks also reflected the positives after Britain scrapped bits of a controversial tax cut plan, tentatively improving global market sentiment and rallying bonds and the pound.

US market rallies

Wall Street's three major indices rallied to close over two percent on Monday as US Treasury yields tumbled on weaker-than-expected manufacturing data, increasing the appeal of stocks at the start of the year's final quarter.

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The Dow Jones Industrial Average rose 765.38 points or 2.66 percent to 29,490.89; the S&P 500 gained 92.81 points or 2.59 percent at 3,678.43; and the Nasdaq Composite added 239.82 points or 2.27 percent at 10,815.44.

FII turn buyers

Foreign investors also seem to be coming back. On October 3, foreign institutional investors (FIIs) bought shares worth Rs 590.58 crore while domestic institutional investors (DIIs) sold Rs 423.16 crore worth of shares, data available with BSE showed.

Consistent buying by FIIs will lift the mood of the market.

Dollar, yields soften

The Dollar Index, which pits the US currency against the euro and four other rivals, hit a more than a week low of 111.40, losing some 2.2 percent over a four-day span.

Meanwhile, the yield on the US 10-year Treasury note tumbled to a September 22 low of 3.587 percent, making riskier assets like emerging market equities attractive.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Shubham Raj is a journalist with over five years of experience covering capital markets. His last stint was with The Economic Times where he wrote on daily happenings in stock markets and led IPO reportage. He also wrote on mutual funds and cryptocurrencies.
first published: Oct 4, 2022 10:56 am