Snapping their three-day slide, the benchmark indices smartly bounced back on Thursday as investors picked up beaten-down financial stocks. Bank stocks bolstered gains in benchmarks, with the Bank Nifty rising 2.2%. The index has gained 6% over the last two weeks, against 2.5% gain clocked by the Nifty50.
While the Sensex surged 503.27 points or 0.94% to settle at 54,252.53, the Nifty50 jumped 144.35 points or 0.90% to end the session at 16,170.15 points. However, the breadth lacked strength with 1,623 stocks sliding for 1,690 advances on the BSE. The Nifty midcap and smallcap rose 1.4% and 0.8%, respectively.
With the US FOMC minutes out of the way now, the market is more or less getting prepared for the likely rate hikes, and hence we saw strong buying on the F&O expiry day,” said Shrikant Chouhan, head of equity research (retail), Kotak Securities, adding that relief rallies will still be seen amid volatility.
Strategists expect the markets to remain volatile for the short and medium term. BofA Securities, which lowered its Nifty50 target for CY22 to 16,000, wrote: “Valuations could compress amid concerns on depreciating rupee, rising inflation and rate hikes being front-ended, along with continued geopolitical issues and global macro headwinds.”
Meanwhile, ratings agency Moody’s Investors Service lowered its growth forecast for India for this calendar year by 30 basis points to 8.8%. For the next year, the agency has retained its forecast of 5.4%.
Global stocks were mixed in Thursday’s trade as investors weighed Federal Reserve minutes that struck a less hawkish note with downbeat remarks on China’s economy by Premier Li Keqiang. Among major Asian markets, India gained the most on Thursday. While Taiwan TAIEX, Kospi and Jakarta Composite ended the day lower, the Shanghai Composite rose 0.5%.
Foreign portfolio investors, who have been offloading Indian equities amid surging inflation and aggressive monetary policy tightening globally, have sold $4.6 billion worth of shares so far in May. That compares with $3.8 billion sold in April.
Among sectoral indices, metals and banks surged the most with over 2% gains. That was followed by realty, which was up by 1.4%. Barring FMCG, all sectors ended the day in the green.