Sensex gains most in nearly three months; Adani stock rout ebbs

The Sensex posted its biggest single-day gain since November 11 as the benchmark index rose for a fifth straight day on Friday. The intense selling pressure seen in Adani group stocks in recent days showed signs of easing.

Growing optimism that interest rates in the US could be lower by the year-end compared to now also helped domestic equities. The Sensex rose 909 points, or 1.52 per cent, to finish at 60,842. The Nifty50 index, which had a more tumultuous week, thanks to the presence of two Adani group stocks, rose 244 points, or 1.38 per cent, to settle at 17,854. This was the 50-share index’s first positive close in three days.

Shares of Adani Enterprises finished 2.2 per cent lower at Rs 1,531, after recovering more than 50 per cent from the day’s low of Rs 1,017. Adani Ports soared 23.5 per cent from the day’s low to finish at Rs 488, with a gain of 5.6 per cent over the previous day’s close. Sentiment improved after two rating agencies said they saw no immediate impact on the Adani group’s credit profile, even as its market cap more than halved in just eight sessions.

A Bloomberg report that Gautam Adani was in talks with creditors to prepay some loans backed by pledged shares also helped restore confidence in his conglomerate’s financial health.

However, Adani Total Gas, Adani Green Energy, Adani Power, Adani Transmission and Adani Wilmar hit their lower trading limits of 5 per cent or 10 per cent. Ambuja Cement and ACC rose 6 per cent and 4.4 per cent, respectively. Overall, the group lost Rs 34,000 crore in market cap, taking its eight-day wealth erosion past Rs 9 trillion mark.

Most global markets have been upbeat this week amid investor optimism that rate hikes by the Fed are ending soon.

Fed Chair Jerome Powell on Wednesday said the US central bank had made progress in its quest to tame inflation. He added that monetary policymakers might deliver a “couple” of more interest-rate increases before putting their aggressive tightening campaign on hold.

“Markets are rising, assuming that we are in the last phase of the rate hike cycle as indicated by the Fed statement,” said Vinod Nair, head of research at Geojit Financial Services.

On Wednesday, the Fed had raised its benchmark rates by 25 basis points to a range of 4.5 to 4.75 per cent. The quarter-point rise comes after a half-point increase in December and four 75 basis-point hikes before that.

Analysts said equity markets were enthused by lower policy rates and expectations that the Fed will achieve a soft landing. And investors are drawing hope from the Fed chair’s remarks acknowledging that price pressures have started to ease.

The selling spree by foreign portfolio investors continued. On Friday, they sold shares worth Rs 932 crore, while domestic investors were net buyers to the tune of Rs 1,265 crore.

Only three Sensex stocks ended with losses that too only marginal. Titan gained the most at 6.9 per cent followed by Bajaj Finance and Bajaj Finserv at over 5 per cent each. HDFC Bank, which rose 3.5 per cent, contributed 214 points to the Sensex gains.

Overall, the market breadth remained weak with 1,237 stocks advancing and 2,310 declining.