Markets bounce back a day after West Asia turmoil led to panic selling

Indian markets made a strong comeback on Tuesday a day after the Israel-Gaza conflict resulted in panic selling that wiped out about Rs 3.68 trillion of investor wealth. The benchmark indices bounced back following the rally in global markets after the dollar and treasury yields dipped on the back of dovish comments by the US Federal Reserve.

The S&P BSE Sensex climbed about 567 points, or 0.87%, to close at 66,079.36, while Nifty50 rose 177 points, or 0.91%, to end at 19,689.85. On an intraday basis, both the benchmarks climbed over 1%.

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Sentiments were lifted after US Federal Reserve officials said that the recent yield surge could justify the caution on interest rates, said experts. Meanwhile, China considering fresh stimulus also drove optimism. The positive takeaway from today’s markets, according to experts, was Nifty recouping all of its losses in the last two days and ending at the day’s high as bulls joined the positive global cues. The ongoing Israel-Hamas conflict may not have a cascading effect on the world economy and the focus will again shift towards global macroeconomics concerns.

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Sluggish demand from key economies will refrain the crude oil prices to stay elevated for long, experts added. Brent crude was trading at $87.36 per barrel as of 8.30 pm IST, 0.93% lower from Monday’s close of $88.15 per barrel.

“The key factor driving the Indian markets is that the geopolitical tensions between Israel and Gaza will be contained within that region only. Strong expectations for the upcoming results will aid the sentiments,” said Ashutosh Mishra, head of research- Institutional Equities at Ashika Stock Broking. The performance of global markets and the commentary by Iran, Turkey, who backed off after US extended support to Israel, have led to the realisation that markets are far better placed than what people were expecting, he added.

Realty stocks lifted the market sentiments on the back of good sales performance in the second quarter ended September. Nifty Realty and BSE Realty, both surged to their 15-year high values, closing up 4.01% at 606.20 and 4.08% at 4,842.12, respectively. This was followed by metals and telecom stocks, with BSE Telecom rising 2.24%, while BSE Metal index climbed 2.59% on Tuesday.

China considering a fiscal stimulus has led to metal stocks and the BSE Metals index rally today, said Mishra. Meanwhile, there is a lot of buzz regarding recent presentation by telecom minister on technology development and telecom infrastructure expansion plans next year, which stirred up telecom stocks today, he added.

The midcap and smallcap gauges outperformed the benchmarks. BSE Midcap surged 1.14% to 32,047.51, while BSE smallcap gained 1.26% to 37,678.75.

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The banking indices also outperformed the benchmarks, with BSE Bankex rising 1.24% and Bank Nifty gaining 1.08%.

The investor wealth rose by Rs 3.53 trillion to Rs 319.71 trillion on Tuesday.

FPIs sold shares worth Rs 1,005.49 crore while DIIs bought equities worth Rs 1,963.34 crore on Tuesday, according to the provisional data by exchanges.

While Bharti Airtel, Kotak Mahindra Bank and Tata Motors were the top Sensex gainers, IndusInd Bank, Tata Consultancy Services and Titan Company were the top losers.

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