Investor wealth surges by Rs 3.2 trn as indices snap 3-day losing streak

Hopes of softer Fed hikes and China's reopening has D-Street upbeat

The benchmark indices, on Monday, snapped their three-day losing streak amidst gains in index majors and optimism on the back of China's reopening and hopes of lower rate hikes by the US Federal Reserve (Fed). The 30-share Sensex rose 847 points or 1.4 per cent and ended the session at 60,747. The Nifty50, on the other hand, ended the session at 18,101, a gain of 242 points or 1.4 per cent. 

Investor sentiment got a boost amidst news reports that the end of China's zero Covid-19 policy is paving way for demand recovery as millions of Chinese are travelling during the spring festival season.

Investors are also betting that the weak wage gains in the US, as revealed in the jobs data last week, will persuade the Fed to go a bit soft on rate hikes. The US non-farm payroll data was better than expected in December and the unemployment rate fell by 0.1 percentage point to 3.5 per cent. However, the average hourly earnings rose 0.3 per cent from the last month.

The softening wage growth has made a section of the markets hopeful of the Fed going a bit easy on the rate hikes. The US central bank sees wage pressures as an impediment in achieving its target of bringing down inflation to 2 per cent.

Market expectations are again at odds with that of Fed officials who made hawkish comments last week.

Kansas City Federal Reserve Bank president Esther George said last week that officials have a tough time as they try to balance inflation and employment. Also last week, Federal Reserve Bank of Atlanta president Raphael Bostic pointed out that there was still a lot of work to do despite moderating price pressures. Bostic added that inflation was way too high and remained the biggest headwind in the US. 

"Unemployment in the US has fallen, which is one of the key elements for the Fed. Wage growth was less elevated, and the hope is that the CPI numbers will be as per market expectations and persuade the Fed to be less aggressive. I am not buying into that. I think markets will remain volatile. we have a market which is oversold and is latching on to any good news they could find," said Andrew Holland, chief executive officer, Avendus Capital Alternate Strategies.

Monday's gain added Rs 3.2 trillion to investor wealth as the market breadth was strong with – with 2,009 stocks advancing and 1,627 declining on the BSE. 

“Despite the recovery, markets may remain choppy as most of the lingering worries are yet to subside," said Shrikant Chouhan, head of equity research (retail), at Kotak Securities

Foreign Portfolio Investors (FPI), were net sellers, worth Rs 203 crore, according to provisional data from the exchanges. 

Barring three, all the Sensex constituents went up. Reliance Industries rose 2.3 per cent and contributed the most to index gains, followed by Infosys and TCS, which gained 2.5 per cent and 3.3 per cent, respectively.

IT stocks gained ahead of TCS quarterly results, and BSE information and Technology rose 2.5 per cent. TCS results were declared after the market hours.

The US initial jobless claims, inflation numbers, the quarterly results of Indian companies and statements of Fed officials will be keenly tracked by investors to determine the market trajectory, going ahead.