The rally did not rub off on stock market debutant Life Insurance Corporation (
) of India, however, whose shares listed at an 8.6% discount to the issue price following the country’s largest initial public offering (IPO).
While the Sensex gained 1,344.63 points to close at 54,318.47, Nifty jumped 417 points or 2.63% to close at 16,259.30. Across all BSE stock categories, winners outnumbered losers 2,607:737, indicating broad-based gains. Among the index’s top gainers,
climbed 7.6% and rose 4.3%
The pace of Tuesday’s market rebound may have opened up the possibility of further gains for the time being, but analysts warned that the worst may not be over. “The strength of today’s move indicates another 400-500 point rally in the Nifty,” said Siddarth Bhamre, head of research at Broking.
“That said, it’s too early to say that a bottom has been reached because basically nothing has changed,” Bhamre said.
The Sensex and Nifty have gained 2.9% in the past two days after falling 13% through May 13 from their 2022 peak on April 5. Market participants said the market was “oversold” after the recent drop.
Bank of America Securities cut its target on Nifty to 16,000 from 17,000 earlier, citing expectations of faster interest rate hikes by the US Federal Reserve and higher-than-expected domestic inflation. The brokerage said it has seen “flattening” market returns from current levels.
Analysts said strength in global markets helped domestic equities stave off a 15.08% spike in wholesale price inflation in India in April reported during trading hours on Tuesday. In March, inflation was 14.55%.
Asian markets rose after China signaled it would ease the lockdown in Shanghai and gradually reopen businesses. The Stoxx Europe 600 rose 1.2%.
U.S. stocks also rose on Tuesday in a broad-based advance as strong economic data helped boost risk appetite in markets rattled by concerns over soaring prices and policy tightening. Treasuries fell along with the dollar. All but one of the 11 major S&P 500 industry groups advanced. The Nasdaq 100 was up more than 2% at press time.
In India, the Volatility Index or VIX fell 7.3% to 22.74, suggesting lower risk perception among traders. However, the VIX levels do not indicate that the mood has turned bullish, analysts said.
“For a change in trend, the market needs to confirm with a higher and lower pattern which remains to be seen and until then, this should be viewed as a pullback move,” said Ruchit Jain, Head of Research at Retail. Brokerage 5paisa. com.
Some analysts said investor money that was set aside for LIC’s IPO could find its way into stocks.
“Since a large amount of money was released after LIC was listed, some of this money may be diverted to stock markets,” said Hemang Jani, head of equity strategy, brokerage and trading. the distribution,
.
Foreign portfolio investors were net sellers at ₹2,192 crore on Tuesday, while their domestic counterparts bought shares worth ₹2,294 crore. So far in May, foreign investors have withdrawn ₹28,784 crore from Indian stocks, bringing total sales since January to nearly ₹160,000 crore.
Investors will watch the direction of the dollar, which is at a 20-year high, for clues to foreign flows. The strength of the US currency follows US consumer inflation in April, which remained close to the 40-year high of 8.5% seen in March.
Rising prices have intensified fears that more aggressive monetary tightening from the Fed is looming. A strong dollar drives outflows from emerging markets as it erodes the value of those assets held in local currencies.
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