Sensex rises 443 pts; Nifty rebounds nearly 1% as auto, IT shares advance

Markets continued to whipsaw, with the benchmark indices close to a per cent on Thursday as investors rushed to buy beaten-down stocks, even as concerns around global recession kept gains under check.

Experts said a fall in oil prices and other key commodities are a silver lining in the domestic market. Brent crude prices are down nearly 15 per cent from this month’s highs on worries that a slowdown in the world economy could dampen demand.

Sensex rose 443 points, or 0.9 per cent, to finish at 52,263.

The Nifty rose 0.93 per cent, or 143 points, to close at 15,557.

After last week’s more than 5 per cent slump — worst weekly showing in more than two years — markets have gyrated between gains and losses during the four trading sessions this week.

On the one hand, market valuations have come down to attractive levels. On the other, sustained selling by overseas investors and a cloudy economic outlook have weighed on performance.

Foreign portfolio investors (FPIs) sold shares worth Rs 2,319 crore, while domestic institutions were buyers to the tune of Rs 2,438 crore. So far this year, FPIs have yanked out over Rs 2.1 trillion from the domestic market amid rising US bond yields and the US Federal Reserve’s (Fed’s) hawkish pivot to reel in runaway inflation.

The Fed’s aggressive monetary tightening has stoked fears of a hard-landing of the US economy.
 

During a testimony to the Congress on Wednesday, Fed Chair Jerome Powell did little to ease fears that the US economy is at risk of falling into recession. He said engineering a soft landing, where inflation is taken back under control without causing growth to fall, is ‘very challenging”.

During its meeting earlier this month, the Fed hiked interest rates by 75 basis points (bps). After Powell’s testimony, Chicago Fed President Charles Evans said another 75-bp hike is a “very reasonable place to have a discussion” in the July Federal Open Market Committee meeting.

Given the Fed’s policy shift, investors are taking the prospects of a recession seriously. This has led to a sharp fall in commodity prices. The Bloomberg Commodity Index was down for a fourth day on Thursday.

“Markets are witnessing headwinds from fears of global recession, monetary tightening, depreciating rupee, and rise in bond yields. On the positive side, fall in crude oil prices and value-buying in beaten-down counters have helped the market gain some momentum,” said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.

The market breadth showed signs of improvement, with over 2,000 stocks advancing and fewer than 1,300 declining on the BSE.

Automotive (auto) and technology stocks led the gains. The top five gainers on the Nifty were all auto companies. Maruti Suzuki, Hero MotoCorp, and Eicher Motors each gained around 6 per.

Tata Consultancy Services and Wipro rose 2.7 per cent and 2 per cent each.

Index heavyweight Reliance Industries fell 1.6 per cent and made a 124-point negative contribution to the Sensex. The India VIX fell 2 per cent to 20.9.

Inputs from Bloomberg