Benchmark indices bounced back sharply on Monday with the Sensex surging nearly 710 points as investors took their cues from a global rally and ignored reports of a weak fourth quarter for Indian companies.
With strong job data diminishing recession fears in the US, the mood became buoyant leading to value buying in heavyweights such as Reliance Industries and the HDFC twins, which were clobbered last week after MSCI assigned a lower weightage to the merged entity.
Amid positive inflows from foreign portfolio investors (FPIs), buyers were cherry-picking banking and finance stocks on expectations that the RBI is unlikely to resort to any more rate hikes.
Last Friday, the 30-share gauge had tanked 695 points largely on account of the MSCI action on the merged HDFC duo. While HDFC rose 1.26 per cent on the BSE, the HDFC Bank stock was up 1.22 per cent on Monday.
Technology counters also rallied on optimism the US economy will not slip into recession, particularly after nonfarm payrolls in April increased 253,000 beating estimates.
The 30-share Sensex rallied 709.96 points or 1.16 per cent to settle at 61764.25, with 27 of its components ending in the green. During the day, it surged 799.9 points or 1.31 per cent to 61854.19.
The NSE Nifty climbed 195.40 points or 1.08 per cent to end at 18264.40 with 42 of its constituents reporting gains.
The market is ignoring the mixed set of Q4 results: a report in the Business Standard daily said the combined net profits of 390 companies have risen 2.3 per cent in Q4, the weakest since April-June 2020.
Market circles said hopes of lower inflation, extended pause by the RBI culminating in a cut by the end of this year or early next year are supporting equities. Moreover, FPIs are in a buy mode: provisional data showed them making net purchases of nearly Rs 2,124 crore on Monday.
“While the undertone continued to remain bullish, the upbeat US market close last Friday further buoyed the local sentiment. With hopes of the interest rate hike cycle reaching its peak and banking woes in the US receding, investors latched upon rate-sensitive stocks of banking, automobile and realty as strong monthly sales numbers are pointing towards a decent recovery,” Shrikant Chouhan, head of equity research (retail), Kotak Securities Ltd, said.
Among the Sensex companies, while IndusInd Bank rose 5.08 per cent, Tata Motors, Bajaj Finance, Bajaj Finserv, NTPC, HCL Technologies and Mahindra & Mahindra gained up to 4.82 per cent.
