Mumbai: Indian share prices have made up most of the losses suffered since 27 February 2007, with the benchmark Sensex gaining 7.1% in the last four trading sessions, to close at 13,308.03.
Sensex was up 2.8% and just 171 points shy of where it was on the Bombay Stock Exchange before a Chinese market-drop led to several days of steep losses. The National Stock Exchange’s Nifty closed 2.96% higher at 3875.90 points.
The latest rally was spurred by the US Federal Reserve keeping its benchmark interest rate at 5.25% and abandoning its tilt towards higher borrowing costs.
“Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth,” the US’s Federal Open Market Committee said on Wednesday in Washington. While inflation is the “predominant” concern, the statement dropped a reference to “additional firming,” giving central bankers more flexibility on the direction of interest rates.
Several global stock markets have also recovered most of the losses since 27 February, with some, such as the Dow Jones Industrial Average (DJIA), actually trading at higher levels now. DJIA was trading well above the 12,216.24 level of 27 February. The Chinese Shanghai Composite index has also gained over 10% since then.
Meanwhile, Indian shares are also seeing selective buying on lowered valuations, even as the “the market is expecting strong quarterly results,” said Ketan Karani, head of research at Kotak Securities.
Meanwhile, despite the seeming recovery, many market participants believe that the negative sentiment that gripped the markets for nearly a month had not been entirely reversed. “I don’t think there is a reversal of sentiment in keeping with the reversal in prices,” said Ambarish Baliga, head of research at brokerage Karvy. “Part of the reason for the recovery in prices is the short-covering by funds. Lots of funds had gone short (speculative sale position) earlier. They are now liquidating those positions,” Baliga added.
As the global concerns recede, domestic concerns, such as rising interest rates and inflation, are still alive.
“We feel the worst was over after the market hit a low of 12,300. Now, we are seeingan upward direction,”saidNirmal Rungta, co-head, private client services group at Edelweiss Securities.
“The market is expected to be range-bound between 12,500 and 14,500 till May. In June or July we will see further upside in the market,” said ICICI Direct’s Harendra Kumar.