Stocks staged another comeback rally on Wednesday extending their gains for a third straight session amidst a slight fall in crude oil prices and reports of oil-tankers arriving on Indian shores. Both benchmark indices put on about a percentage point each. The 30-share BSE Sensex jumped 633.29 points or 0.83% to end the day at 76,704.13 while the broader NSE Nifty climbed 196.65 points or 0.83% to close the session at 23,777.80. The rally was fairly broad-based with the BSE MidCap Select index jumping 2.39% and the SmallCap Select index going up by 1.59%. Investors’ wealth rose by ₹5.70 lakh crore, as per data on the BSE
The benchmark indices have now gained almost 3% each over the last three sessions, in a smart recovery. However, they remain lower by about 10% from their record highs. Some experts anticipate another slide should the war be prolonged and should Brent crude oil prices remain above the $100-per-barrel mark for longer.
Bargain Hunting
Foreign portfolio investors remained sellers. “In the current scenario, there is no compelling reason for them to come back,” Dhananjay Sinha,CEO and co-head of institutional equities at Systematix group, said. In the last 11-12 years, there have been only three years of strong foreign investor participation, he added. Market watchers believe there has been some bargain hunting after the recent sharp sell-off after the start of the war in West Asia which had sent crude oil prices to levels of over $130/barrel at one point.
Stock prices had come off by as much as 30-40% from their 52-week highs as foreign funds continued to take risk off the table and some domestic investors also opted to book profits. “There has been some value buying especially where prices have seen a steep drop,” said a head of an institutional brokerage. He added both mutual funds and retail buyers have been adding to their positions. Moreover buying in beaten-downs sectors such as Information technology has surfaced following recommendations from brokerages.
Some of the rebound in stock prices has also been attributed to short-covering. Experts point out that the markets may not have bottomed out given the many uncertainties relating to the war and crude oil prices.
Valuation Stress
In the last two years, Nifty valuations have eased from the peak but remain pricey when compared with Asian peers. With oil prices expected to hurt the economy, there are fears of earnings downgrades to FY26 as well as FY27 estimates. ends