The equity benchmark indices rebounded sharply by over 1 percent on Friday after three consecutive sessions of losses, tracking gains in Asian markets and renewed foreign fund inflows.
Sensex surged 1,046.30 points or 1.29 percent to settle at 82,408.17. During the day, it jumped 1,132.62 points or 1.39 percent to 82,494.49. The Nifty climbed 319.15 points or 1.29 percent to 25,112.40.
Mahindra & Mahindra, Eicher Motors, State Bank of India, UltraTech Cement, Bajaj Finserv and Maruti Suzuki were among the top gainers on the Sensex pack.
Key factors behind the rally:
1) Positive Asian cues: Major Asian indices, including Japan’s Nikkei 225, South Korea’s Kospi, Hong Kong’s Hang Seng and China’s Shanghai Composite, traded in the green. A firm trend in regional markets lifted investor sentiment at home.
2) FII buying: Foreign Institutional Investors (FIIs) were net buyers of domestic equities worth Rs 934.62 crore on Thursday, while Domestic Institutional Investors (DIIs) also purchased shares worth Rs 605.97 crore. Continued foreign inflows improved the sentiments in the domestic market.
3) Rupee strength: The rupee appreciated by 13 paise to 86.60 against the US dollar in early trade, aided by a decline in global crude prices and a weaker greenback. A stronger rupee helps reduce import costs and boosts foreign investor sentiment.
4) Fall in crude prices: Brent crude futures fell 2.45 percent to USD 76.92 a barrel. Lower crude prices are a positive for India, which imports the bulk of its oil requirements.
5) India VIX down: India VIX, a measure of market volatility, declined over 4 percent to 13.66, indicating reduced investor nervousness and improved near-term stability in the equity markets.
6) Buying in index heavyweights: Strong buying was witnessed in blue-chip stocks such as Reliance Industries, Bharti Airtel and HDFC Bank, which contributed significantly to the day’s gains.
7) PSU project finance stocks rally: Shares of public sector project financing companies such as IREDA, PFC, REC, HUDCO and IRFC rallied after the Reserve Bank of India finalised its guidelines on project finance. The final norms, released on June 19, require lower provisioning during the construction and operational phases compared to the draft proposal issued in May, easing concerns for lenders.
8) Geopolitical relief: Investors took some comfort from the absence of any immediate escalation in the Iran-Israel conflict. The White House said US President Donald Trump would decide on potential involvement within the next two weeks, citing chances of negotiations with Iran.
Technical view
Anand James, Chief Market Strategist at Geojit Financial Services, said, “Though Nifty hovered near the previous close, the broader market showed significant divergence. Only 11 per cent of Nifty 500 stocks ended above their 10-day SMAs, suggesting an extreme move, raising hopes of a pullback.”
He added, “We are watching the 24,720–24,690 zone for possible dips. A fall below this could dampen recovery hopes, though a decline to 24,060 is unlikely immediately, with the 24,500 region expected to offer support.”
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