Key indices snapped a five-day losing streak on Monday and the Sensex reclaimed 80,000 points level as expectations of easing geopolitical tensions in the West Asia and strong earnings from ICICI Bank brought much-needed relief for investors.
The Sensex gained 602.75 points, or 0.8%, to 80,005.04 points, and the Nifty rose 158.35 points, or 0.7%, to close at 24,339.15 points. The broader market, too, gained in line with the benchmark indices, while the volatility index India VIX eased 2.3%.
Over the weekend, Israel attacked some military targets in Iran in retaliation to the missile attack earlier this month. While Iran condemned the attack, it said there was “limited damage”, and added that it “recognises its responsibilities towards regional peace and security”. While the retaliation from Israel was anticipated by global investors, there were concerns that it may target energy facilities, potentially fuelling a scarcity in supply and rise in prices. With no damages reported to energy facilities, prices of Brent Crude oil eased by over 6% on Monday.
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“Oversold conditions, lack of aggressive FPI selling, a sense of relief post Israel’s retaliatory strike against Iran – all led to an improvement in sentiment,” said Deepak Jasani, head of retail research at HDFC Securities.
Apart from this, investors are eyeing elections in Japan, where no party has managed to get a majority. Investors believe this could slow down Bank of Japan’s rate hike plans, reducing the risk emerging from unwinding of yen carry trades.
The Nifty PSU Bank index was the biggest sectoral gainer on Monday as it rose nearly 4% after Indian Bank and Bank of Baroda reported strong earnings for the quarter ended September. ICICI Bank rose 3% after strong earnings and topped the list of gainers on Sensex.
Strong earnings from the banks likely provided some relief to investors as Q2 earnings so far have failed to meet Street expectations.
While all the sectoral indices on the NSE ended higher on Monday, gains were largely driven by banks, real estate, metal, pharmaceutical and healthcare companies.
“Stability in the broad-based rally requires more evidence from earnings, which are currently in the doldrums of weak demand and margin pressure.
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