Led by heavyweights, stocks rebounded smartly on Friday to snap a two-week losing streak and record their best session in nearly six months, shrugging aside concerns on exposures of lenders to Adani Group companies. Experts said the correction over the past month has seen stock valuations become less expensive. The financial services and IT companies together contributed to nearly 42% of Sensex’s gains.
The gains came ahead of the counting of votes for Maharashtra state elections on Saturday, where the ruling Bharatiya Janata Party-led alliance is seen having an edge as per exit polls.
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The Nifty and the Sensex rose 2.4% and 2.5%, respectively, marking their biggest single-day gains in nearly six months. The 30-stock index surged 1,961 points to close at 79,117.11, while the Nifty ended 557 points higher at 23,907.25. State-owned lenders advanced by about 3% while other financials and banks gained about 1.5% each, recovering from a fall in Thursday’s session.
However, experts do not see Friday’s strong bounce back as a sign of a reversal in the trend amid lingering uncertainties including the Russia-Ukraine war and US President-elect Donald Trump’s tariff policies.
Andrew Holland, CEO of Avendus Capital Alternate Strategy said the markets have been attempting to bounce back given that they were in oversold territory. “But nothing has changed fundamentally. The market is likely to consolidate in the near term until there is some clarity regarding Trump’s policies,” Holland observed.
Ashish Gupta, CIO of Axis Mutual Fund observed that the accelerating pace of equity supply is the key reason domestic equity markets are again developing a vulnerability to the volatility in foreign flows.
The markets have been moribund for about a month now with shares giving up value amidst expensive valuations and weak corporate earnings for the September quarter. Foreign Portfolio Investors (FPI) have been selling relentlessly and offloaded shares worth Rs 1,278 crore on Friday. On the other hand, domestic institutional investors (DIIs) bought Rs 1,722 crore worth of shares.
Even as FPI flows have remained volatile, DIIs have been supporting the market in the last couple of years. However, the selling by FPIs over the last couple of months has overshadowed domestic flows to an extent.
The Nifty IT index was the biggest sectoral gainer as it rose 3.3%,
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