India volatility index or India VIX slumped 6.94% to end at 15.22 on Friday, indicating investors are not estimating any sharp correction in markets ahead
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Markets made a strong rebound on Friday as worries about inflation pressures eased. The BSE Sensex gained 767 points or 1.28% ending at 60,686.69. The Nifty was up 229.15 points or 1.28% to close the day at 18,102.75.
“Domestic equities witnessed sharp recovery today especially towards the second half of the day mainly led by sharp rebound in heavyweight financials and IT. Further, recovery in metals and FMCG also contributed to rally. Positive global cues also aided sentiments, which was hurt yesterday due to sharp upsurge in US CPI print," said Binod Modi, Head Strategy, Reliance Securities.
Shares in other Asia-Pacific region were mostly higher. Japan’s Nikkei gained 1.13%, in South Korea, the Kospi surged 1.5%, Hong Kong’s Hang Seng was up 0.32% while Shanghai composite in China rose 0.18%.
According to Vinod Nair, head of research, Geojit Financial Services during the week, the global markets remained highly volatile as inflation fears elevated. "The momentum which was lost during the week was regained as inflation worries started fading with investors shifting their focus to good quarterly earnings, economic recovery and strong domestic macro data points. Today’s market rally was led by IT, energy and realty stocks while global peers traded mixe,: Nair said.
Meanwhile, India volatility index or India VIX slumped 6.94% to end at 15.22 on Friday, indicating investors are not estimating any sharp correction in markets ahead.
However, analysts at global brokerage firms remain worried about expensive valuations of India. On Friday, Goldman Sachs downgraded India equities to 'market weight’. Goldman Sachs said that despite being the best-performing regional market in 2021, risk-reward for Indian equities is less favourable at current levels.
Indian markets have gained nearly 31% in 2021 and 44% since last upgrade by Goldman Sachs in November. It sees macro headwinds emerging as the US Federal Reserve and RBI may tighten policy rates and oil price remain elevated.