Benchmark indices surged 3% on Tuesday, recouping the previous session’s losses on de-escalation hopes in Ukraine. Broad-based buying across sectors helped the indices recover lost ground on Tuesday. Of the 19 sectoral indices compiled by the BSE, 10 gained more than 3%, with the BSE Auto and Bankex rising as much as 3.9% and 3.5%, respectively. Indian indices gained the most in Asia on Tuesday.
While the Sensex surged 1,736.21 points to settle at 58,142.05, the broader Nifty50 gained 509.65 points to end the day at 17,352.45 points. Both indices surged the most in more than a year. Heavyweights Reliance Industries and Infosys contributed nearly a quarter of the Sensex’s gains on Tuesday. While the BSE Midcap index rose 2.7%, the gauge for Smallcap gained 1.97%.
Easing geopolitical tensions between Russia and Ukraine also spurred Brent crude prices to retreat. While the local currency advanced the most in two weeks to close at 75.34 against the greenback, crude oil prices declined 3.07% near $93.52 levels per barrel.
Media reports suggesting pulling back of some Russian troops to their bases in areas near Ukrainian border brought back investor confidence in late trade on Tuesday. “Reduction in tensions on Russia Ukraine front has led to buying interest/short covering in the markets,” said Deepak Jasani, head of Retail Research at HDFC Securities.
European markets were also trading in the green after the Russian defence ministry reportedly announced that it had begun returning some troops to deployment bases after training exercises near the Ukrainian border.
Meanwhile, Bank of America cuts the Nifty50 target for December to 17,000 from 19,100, citing expectations of a faster rate increase cycle by the US Federal Reserve and its impact on local monetary policy. “Risks of an accelerating US Fed rate-increase cycle are likely to play out; expect RBI to raise its key interest rate by 100bps by March 2023,” the foreign brokerage wrote in an investor note.
However, overseas investors have been offloading Indian shares, even as they started buying in other emerging markets. So far in 2022, FPIs have sold $6.3 billion worth of Indian equities compared to buying of $1.9 billion in Thailand and $1.1 billion worth of Indonesian equities. Taiwan and South Korea witnessed outflows of $2.5 billion and $2.25 billion, respectively, during the same period.