Benchmark stock indices Sensex and Nifty gained nearly 1 per cent in Wednesday’s trade as investors shunned concerns regarding a recovery in crude oil prices, steep foreign outflows, reports of a likely Israel strike on Iran’s nuclear facilities, and rising Covid cases.
Investors instead paid heed to reports of a likely early onset of monsoon in Kerela and positive momentum across Asia markets. Stock analysts are not amused.
The BSE Sensex climbed 764.61 points or 0.94 per cent to 81,951.05. Two of index constituents ITC Ltd and IndusInd Bank Ltd would be reporting March quarter results today. Nifty quoted at 24,924.50, up 240.60 points or 0.97 per cent.
Among largecap stocks, Sun Pharma advanced 1.84 per cent to Rs 1,738.70. Bajaj Finance added 1.71 per cent to Rs 9,251. Mahindra & Mahindra, Bajaj Finserv, Tech Mahindra, HDFC Bank and Tata Motors added over 1 per cent. IndusInd Bank was the lone Sensex loser, falling 1.02 per cent to Rs 774, as the bank is seen reporting losses for Q4.
A total of 2,223 BSE-listed stocks advanced, 1,369 declined and 178 shares saw no price movement.
The market gains were seen even as data showed FPIs were net sellerof Rs 10,016 crore worth equities on Tuesday. If this persists, it has the potential to impact the market, said VK Vijayakumar of Geojit Investments.
Kotak Institutional Equities said the market is being drien by narratives. It has celebrated incremental ‘positive’ news, even as US reciprocal tariffs have only been suspended until July 9. The brokerage said Indian markets have also priced in positives from ongoing talks with the US, despite trade talks being extended, US demands of zero tariffs on all US exports (including agri-goods) and India running a decent trade surplus with the US.
“The recent rally in Indian markets has resulted in large-caps trading at or above full valuations, mid-and-small caps trading at lofty valuations and ‘narrative’ stocks trading at frothy valuations. The market is again in the grips of irrational exuberance with the market quick to discount any half-baked narrative (defense being the latest one),” it said.
VK Vijayakumar said there are prevailing concerns over credit rating downgrade of US sovereign debt and the consequent spike in US bond and Japanese bond yields. Rising COVID cases in some parts of India and reports of a possible Israel attack on Iran are doing the rounds, he said.
“The 30-year JGB yield spiking to 3.14 per cent in the backdrop of the US 30-year yield spiking to 5 per cent couple of days back sends a feeling of disquiet in financial markets. This may not create any near-term impact but is bound to have long-term consequences. Investors have to exercise caution. Investors can wait and watch for the events to unfold,” Vijayakumar said.
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