Sensex, an elegant leap to recover from two consecutive sessions of losses

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Sensex, an elegant leap to recover from two consecutive sessions of losses

India stock market- Sensex jumps 500 points, tracking global equities rally

Indian stock indexes opened in the green on Thursday, tracking the recovery in the broader Asian stock gauge from the lowest level since the pandemic-led chaos, but it lagged a rally on Wall Street as oil prices stabilized at levels not seen since before the Russian invasion of Ukraine.

The BSE Sensex Index jumped 550.73 points to 59579.64 in early trading, and the broader Nifty Index rose 156.1 points to 17,780.50.

On Wednesday, both benchmark stock benchmarks fell for a second straight session, driven by sell-offs in global stocks and commodities.

Ahead of the markets opening, Prashanth Tapsi, Senior Vice President of Research at Mehta Equities, said, “After two days of steady decline, local stock indices are likely to have a strong open, reflecting the gains in US markets and the subsequent move in other Asian peers. An uptick was seen in the indices. The United States though a Federal Reserve official said the focus is on maintaining tight controls on inflation.

He added, “Seeking bargains and buying value will likely be the preferred topic as the Nifty benchmark prepares for a major technical breakthrough to the upside.”

Nifty IT and PSU Bank (public sector bank) are up more than 1 percent each. Of the Nifty 50 stocks, 45 advanced while the remaining five were trading in red, according to National Stock Exchange data.

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“There is a clear message from the market now. Despite the high valuation, global headwinds from rising inflation, a slowing global economy, and a very hawkish Fed, the domestic market has been surprisingly resilient,” he told ANI.

He said the buy-on-lows strategy for investors has worked well in this current rally and it makes sense to continue with a similar strategy.

“If the rally from current levels is to continue, it will need support from the deteriorating IT sector, which looks good from a valuation perspective,” added Mr. Vijayakumar.

The recovery on Wall Street helped the MSCI Asia Pacific index outside Japan to recover after falling to lows last seen in the wake of the 2020 pandemic.

Japan’s Nikkei rose 1.96 percent in early trading. Australia’s S&P/ASX 200 advanced 0.72 percent, while MSCI’s broadest index of Asia-Pacific shares excluding Japan jumped 0.33 percent.

But that fell short of gains of about 2 per cent in the S&P 500 and Nasdaq 100 overnight, as all three Wall Street indexes saw big gains.

As traders evaluated the stock’s recovery, Hong Kong and China were slow, and US futures were volatile.

The announcement of worse-than-expected trade numbers and a prolonged lockdown in Chengdu showed no easing in the country’s strict non-spreading coronavirus policy, sending China’s blue-chip stocks marginally lower.

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While oil prices have partially recovered this week, demand threats from the wave of monetary tightening and China’s COVID-19 problems due to recession have been reported. Chengdu, a huge Chinese metropolis, has prolonged a week-long lockdown in most downtown areas.

Crude oil prices stabilized but were below $90 a barrel for the first time since Russia invaded Ukraine in late February.

Investors are turning their attention to the European Central Bank’s interest rate meeting and Federal Reserve Chairman’s speech later today.

To combat inflation, central banks must raise interest rates quickly, but they must do so carefully to avoid damaging deflation. The market volatility caused by the uncertainty has led to significant losses in bonds and stocks this year.

“The stock market has gone up several times even as the bond market is showing a lot of negative volatility and the dollar continues to rise,” Linda Dussel, chief equity strategist at Federated Hermes, told Bloomberg TV.

“You have to wonder when we can expect a sustained rise here or believe we are out of the woods,” she added.