Tuesday morning saw a strong recovery in domestic stock indices following a two-day decline, matching gains observed in other Asian markets as investors concluded that the recent decline was unjustified.
The BSE market capitalization (m-cap) increased by over 7 lakh crore, indicating that investor wealth was there as the BSE Sensex increased by around 1,100 points and the Nifty recovered to 24,350. The top gainers on the Sensex were Infosys Ltd., JSW Steel, Larsen & Toubro, and Tata Motors Ltd. The India VIX, a measure of fear, fell 14.85% to 17.34.
The BSE Sensex climbed 1,092.68 points to hit a high of 79,852.08. It was later trading at 79,606.54, up 847.14 points or 1.08 per cent. Nifty hit a high of 24,382.60. It was later trading at 24,294.60, up 237.20 points or 0.99 per cent. The BSE m-cap added Rs 7.27 lakh crore to Rs 4,49,11,923 crore from 4,41,84,150 crore a day ago.
Earlier today Japan’s Nikkei 225 climbed over 11 per cent intraday. It was later trading at 34,090.20, up 2,631.78 points or 8.37 per cent. South Korea’s Kospi surged 81.30 points or 3.33 per cent to 2,522.85. As the day progressed, the mainland China’s Shanghai Composite added 0.56 per cent to 2,876.81 while Hong Kong’s Hang Seng advanced 0.88 per cent to 16,845.10.
“It appears that the US recession fears are a bit premature and overdone. Investors need not panic. Quality largecaps can be slowly be accumulated.” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Shares of Tata Motors jumped 3.22 per cent to Rs 1049.35. L&T added 2.54 per cent to Rs 3,617.55. Tech Mahindra, JSW Steel and HCL Technologies gained over 2 per cent each. TCS, Bajaj Finserv, Tata Steel, Adani Ports, Maruti Suzuki India and SBI added up to 1.6 per cent. Reliance Industries and Bajaj Finserv also gained over 1 per cent each.
While fears of the looming US recession took toll on investor sentiment recently, the unwinding of Yen carry trades, fears that Iran could attack Israel anytime, uninspiring quarterly results in India and rich valuations added to the turmoil. US stocks settled up to 3 per cent lower overnight.
“It is hard to say if the recent sharp correction in the market will finally result in non-institutional investors becoming more cautious. They have ignored the most recent negative developments (election results, higher capital gains tax),” said Kotak Institutional Equities.
Kotak said the growing number of non-institutional investors and their price-insensitive investment approach have been the
primary drivers of the Indian market.
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Source: Business Today
