Equity markets opened higher on Monday, staging a recovery after their steepest weekly decline in 18 months, as positive US inflation data and Asian market cues lifted sentiment. The Sensex opened higher at 78,488.64 from its previous close of 78,041.59 and climbed further to 78,728.06 as of 10.10 AM, gaining 686.47 points or 0.88 per cent. Similarly, the Nifty opened at 23,738.20 compared to its previous close of 23,587.50 and is currently trading at 23,789.70, up by 202.20 points or 0.86 per cent.
The markets are attempting to recover from last week’s massive sell-off that saw the Nifty plunge 4.77 per cent, its worst weekly performance since June 2022. The benchmark indices had slipped below their 200-day moving averages amid heavy selling by foreign institutional investors (FIIs).
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“The FII buying witnessed in early December completely reversed last week with FII selling of ₹15,826 crores. The outperformance of the US and the relative underperformance of India are driving this change in FII strategy,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Among sectors, pharmaceuticals emerged as the sole outperformer last week, gaining over 1.5 per cent, while metal and banking stocks witnessed sharp corrections of over 5 per cent. The volatility index (India VIX) rose 3.88 per cent to 15.07, indicating continued market uncertainty.
Leading the gains on NSE were Shriram Finance (2.46 per cent), JSW Steel (2.23 per cent), HDFC Bank (1.83 per cent), Trent (1.75 per cent), and Hindalco (1.65 per cent). The major losers included Hero MotoCorp (-0.60 per cent), HDFC Life (-0.58 per cent), Apollo Hospitals (-0.43 per cent), BEL (-0.29 per cent), and NTPC (-0.20 per cent).
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Market analysts suggest the rebound could face resistance ahead. “The market is expected to remain weak unless it is able to record a daily close above 24,150,” said Akshay Chinchalkar, Head of Research at Axis Securities, adding that support lies at 23,400.
The positive opening follows encouraging US data showing the Federal Reserve’s preferred inflation gauge cooling to 2.4 per cent in November, below the expected 2.5 per cent. “The strength of the US economy, robust US corporate earnings, expectation of corporate tax cut by President Trump soon after assuming office and the steady appreciation in US dollar are factors favourable to the US market,” Vijayakumar noted.
In sector-specific movements, hotel stocks are expected to see positive sentiment driven by the wedding season and MICE activities, while realty stocks may maintain momentum due to solid demand. IT stocks could perform well after Accenture raised its FY25 revenue growth forecast.
“Strong advance tax collections, showing over 20 per cent growth, suggest robust Q3 results expected next month. Additionally, there is hope that the Reserve Bank of India (RBI) will reduce interest rates in the coming year,” said Vikas Jain, Head of Research at Reliance Securities.
The global markets are providing support, with Asian stocks climbing and US markets closing higher on Friday. However, analysts advise caution. “Short-term traders should remain cautious and selective, as there is a risk of being trapped at lower levels,” warned Shrikant Chouhan, Head Equity Research at Kotak Securities.
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Published on December 23, 2024
https://www.thehindubusinessline.com/markets/stock-markets/equity-markets-rebound-after-worst-weekly-fall-since-june-2022/article69017758.ece
