A Goldman Sachs report on Reliance set the tone for a market rebound on Wednesday, with Maruti adding further ballast as the Sensex jumped 526 points to settle near the 73000-mark, while the Nifty closed above the 22100 level.
The market mood also rose amid a bullish outlook on India’s economy. The Sensex had declined 361 points on Tuesday.
It was RIL that led the gains in the benchmark indices after Goldman Sachs raised its 1-year target price by 16 per cent to Rs 3,400 which led to its shares rallying 3.60 per cent.
Maruti Suzuki was also in the fast lane as its market cap went past Rs 4 lakh crore during intra-day trades after it hit a new 52-week high on optimism over its growth path.
The analysts of Goldman Sachs said: “Reliance has invested nearly $30 billion between 2012-13 and 2017-18 to increase scale, integration and cost competitiveness
of the O2C (oil to chemical) business, and close to $60 billion between 2012-13 and 2023-24 in 4G/5G capabilities to create a high-growth telecom business.
“With pan-India 5G rollout now likely completed and potential telecom tariff hikes ahead, we expect the telecom business to become a strong FCF (free cash flow) generation business alongside current cash cow O2C,’’ Goldman Sachs said.
Analysts said the upbeat sentiment on Wednesday follows the bump-up in India’s GDP growth estimates.
While both Moody’s and Standard & Poor’s have raised their projections, Morgan Stanley has upped its forecast for 2024-25 to 6.8 per cent from 6.5 per cent.
“The recent upward revision in India’s GDP growth forecast by both Moody’s and S&P Global rating agencies uplifted the sentiments. Further decline in domestic current account balance in October-December and more than Rs 50,000 crore buying by domestic institutions in March added to positivity,’’ Siddhartha Khemka, head — retail research, Motilal Oswal Financial Services, said.
The rally on Wednesday came in a holiday truncated week as the markets will be shut on Friday (Good Friday).
Analysts are also expecting some amount of volatility with the monthly derivatives expiry on Thursday.
Investors will focus on global data for the rest of the week — the US GDP numbers on Thursday and PCE (personal consumption expenditure) inflation — while they await cues from US Fed chair Jerome Powell who will speak at an event on Friday.
After that, the focus will shift to the Monetary Policy Committee (MPC) in India which will begin its three-day meeting on April 3.
The Indian central bank likely sold US dollars to cap further depreciation in the rupee after the currency hit a fresh record low of 83.45 on Wednesday due to strong dollar demand from local importers and oil companies, four traders told Reuters.
