Sensex Gains Over 240 Points To Near 62,000 Mark On Fed Pivot Hopes

Stock Market India: Sensex, Nifty gain to reverse previous session’s losses

Indian equity benchmarks gained on Tuesday, taking cues from a global stocks rally on hopes the Federal Reserve moves away from its ultra-aggressive policy stance and lower domestic inflation easing helped sentiment further.

The BSE Sensex index rose 248.84 points, or 0.4 per cent, to end at 61,872.99, and the broader NSE Nifty index gained 74.25 points, or 0.41 per cent, to close at 18,403.40.

“The rally gathered pace towards the closing hours after trading range-bound for a major part of the trading session. Majority of the European and Asian indices logged gains, which had a rub-off effect on the local benchmarks,” said Shrikant Chouhan, Head of Equity Research for Retail at Kotak Securities.

On Monday, both benchmarks closed lower after see-sawing through most of the session between losses and gains as investors booked some profits, following a blistering rally on Friday.

Data released after market close on Monday showed retail inflation eased to a three-month low of 6.77 per cent in October, down from a five-month high of 7.41 per cent in September.

India’s central bank looks at retail inflation mainly to frame monetary policy, and any cooling in price pressures is a positive sign for the Reserve Bank of India fighting elevated inflation and trying to stimulate the economy simultaneously. 

In addition, more than 1,000 businesses released their quarterly results on Monday as the nation’s month-long earnings season came to an end. Most of them reported profit increases and hinted to brighter times ahead despite the global slump, according to Reuters.

Global risk-taking has increased in recent days as a result of softer-than-expected US data, which many believe will allow the Fed to raise rates in increments of 50 basis points following three 75-basis-point hikes.

Vice Chair Lael Brainard, who stated on Monday that it would likely be “appropriate soon to switch to a slower rate of rises,” supported that point of view.

While US market futures indicated a recovery, the Stoxx 600 benchmark for Europe wobbled. Hong Kong’s Hang Seng benchmark increased by as high as 3.6 per cent in Asia. Treasury yields fell, the dollar fell, and the yen briefly fell as a result of an unexpected slowdown in Japan’s economy.

A day after Fed Governor Christopher Waller indicated the endpoint of the cycle was “far off,” Fed Vice Chair Lael Brainard stated that the US central bank will likely soon reduce its rate hikes but highlighted that they had “more work to do.”

“It’s certainly a time to be thinking about a recovery regime unfolding for markets,” Kristina Hooper, Chief Global Market Strategist at Invesco, said on Bloomberg Radio. “But it’s going to take a little time before we know if this really is something of a turning point for inflation and the Fed can be a lot more comfortable about hastening the end of tightening.”

Meanwhile, Chinese Premier Xi Jinping and US President Joe Biden’s meeting on Monday raised optimism for improved relations between the two superpowers. Beijing had already promised efforts to ease Covid limits and boost China’s struggling real estate market.

One of the biggest drivers of growth in the MSCI Asia Pacific Index was Chinese technology stocks. Taiwan Semiconductor Manufacturing Co. increased by as much as 9.4 per cent after Warren Buffett purchased a stake in the chipmaker for around $5 billion.