The benchmark equity indices recouped early losses on Friday to settle higher for a second consecutive session, supported by gains in metal shares and positive global trends.
Sensex climbed 223.86 points, or 0.28 percent, to settle at 81,207.17. During the day, the index hit a high of 81,251.99 and a low of 80,649.57, gyrating 602.42 points. The Nifty edged higher by 57.95 points, or 0.23 percent to 24,894.25.
Tata Steel, Hindalco Industries, Kotak Mahindra Bank, Axis Bank and JSW Steel were among the key gainers, rising up to 4 percent.
Following are the key factors driving the recovery:
1) Buying in metal stocks: Tata Steel gained nearly 3 percent and was the top performer on the Nifty 50 index. Investor interest in the sector rose after reports that the European Union may cut steel import quotas by half and impose a 50 percent duty on volumes above those levels. Brokerages said the impact would be limited for Tata Steel and SAIL, which have less than 8 percent share in exports, while Tata Steel’s Netherlands operations, contributing a quarter of its revenue, could benefit. Gains in metal counters lifted overall market sentiment, reported Informist.
2) Capital spending push: Finance Minister Nirmala Sitharaman reiterated the government’s commitment to raise capital expenditure to support growth. The economy grew 7.8 percent in the April-June quarter, the fastest pace in five quarters. Higher spending expectations aided infrastructure and capital goods stocks, providing support to the market.
3) Crude oil decline: Brent crude prices fell for the third straight session to a 16-week low as concerns over a potential US government shutdown and expectations of higher OPEC+ supply weighed on the market. Lower crude prices ease concerns on India’s import bill and inflation, which is positive for domestic equities.
4) Global cues: Asian equities traded mixed, with Japan’s Nikkei and South Korea’s Kospi advancing sharply, while Hong Kong’s Hang Seng index was lower. On Wall Street, benchmark indices closed at record highs on Thursday, supported by technology shares and expectations of further US rate cuts. Strong global market trends improved risk appetite for Indian equities.
5) Value buying: After an initial eight-day losing streak, investors engaged in value buying, helping the indices recover from intraday lows. Markets also settled higher on Wednesday.
6) India Vix declines: The fear gauge or the volatility index declined over 2 percent to 10.05 level, showing signs of reduced market uncertainty.
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