Markets rally 1.9 pc, Sensex zooms 1,041 pts

Aided by strong global cues, domestic stock markets rallied on Monday by 1.90 per cent amid expectations of softening inflation worries and low valuations. The benchmark Sensex shot up by 1,041 points to 55,925.74 and the NSE Nifty index rose by 309 points to 16,661.40 as IT stocks made a sharp comeback.

Foreign investors, who were big sellers in the last seven months, pumped Rs 502 crore and domestic institutions invested Rs 1,524 crore on Monday.

Nifty rose for the third consecutive session following positive global cues due to China easing Covid curbs and sharp Friday gains on the Wall Street. Some local positive factors that cheered the mood included early arrival of monsoon in Kerala, raising hopes of a favorable impact on agri crops. FPI buying after big outflows in the last several weeks also boosted the sentiment.

Analysts said a near term trend reversal is visible in the domestic market, supported by valuation comfort and positive trend in the global counterparts. “US stocks were boosted on softening inflation worries which will be a crucial factor in deciding the tone of the upcoming Fed policy meeting. The easing of long-running lockdown in China also helped in lifting the sentiments across Asian markets. The market is expected to have a positive run in the near term; However, the impact of central bank policies will be a key factor to be monitored, ”said Vinod Nair, Head of Research at Geojit Financial Services.

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Almost all the sectoral indices contributed to the move with consumer durables, realty and IT remaining the top gainers. The broader markets too witnessed healthy traction as Mid-cap and Small-cap indices ended higher by more than two per cent each. IT index rose by 3.75 per cent and consumer durables 4.41 per cent.

“Markets have regained some strength citing the less hawkish tone of the US Fed in the recently released meeting minutes. On the domestic front, the early onset of monsoon has further lifted sentiment. Going forward, with earnings season largely behind us, upcoming macroeconomic data – GDP numbers, PMI data and auto sales – will be in focus for cues, said Ajit Mishra, VP – Research, Religare Broking Ltd

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According to analysts, the market is set for a near-term rally. The sharp upswing in Nasdaq and S&P 500 late last week indicates near-term trend reversal. The decline in dollar index and the US 10-year bond yields are positives for risk particularly in emerging markets. The beaten down IT segment is likely to stage a good comeback assisted by short-covering. Financials, particularly the leading banks, have more room to go up assisted by delivery-based investment buying. However, Brent crude at $ 120 is a major macro headwind, analysts said.

The rupee inched 4 paise higher to close at 77.54 against the US dollar supported by positive domestic equities and a weak American currency overseas. Yield on benchmark 10-year bond rose by six basis points to 7.40 per cent.

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