Markets take U-turn on hopes of localized Israel-Hamas war
The Nifty gained nine-tenths of a percent, the most in over a month, to close at 19,689.85, while the Sensex posted the highest gain in over three months, rising 0.87% to 66,079.36 on Tuesday.
Indian stock markets took cues from global stock markets to recoup all their losses of the previous day, as hopes of the Israel-Hamas war remaining confined to the Gaza strip caused a softening in crude prices, which was reinforced by Israel’s TA 35 Index trading up 0.9% at 1745 at the time of writing.
Dovish comments by a senior Federal Reserve official also boosted sentiment. While FIIs remained sellers of a provisional ₹1,005.49 crore, DIIs purchased shares worth ₹1,963 crore.
The Nifty gained nine-tenths of a percent, the most in over a month, to close at 19,689.85, while the Sensex posted the highest gain in over three months, rising 0.87% to 66,079.36 on Tuesday.
The broader market outperformed with the Nifty Midcap 150 and the Nifty Smallcap 250 indices rising over a percent each.
Nifty Realty was at a multi-year high of 606.2.
However, despite the market recovery, volatility index Vix fell just 1.4%, suggesting the near term risks persist. Adani Enterprises, Adani Ports, Hindalco, Bharati Airtel and Coal India were the top Nifty gainers, rising 2.30-5.37%. Adani Ports rose 3.7% after brokerage Motilal Oswal initiated coverage with a target of ₹1,010, and CLSA also maintained a buy with a target of ₹789.90.
Brent crude traded down 35 cents at $89.54 a barrel, down from the high of $90.88 the previous day, on rising expectations of the conflict not spreading outside Gaza. The rupee gained a marginal two paise to close at 83.25/USD while the benchmark 10-year bond yield fell 3 basis points to close at 7.35%.
Comments by Federal Reserve vice chair Philip Jefferson implying that the Fed’s rate setting committee would proceed cautiously while firming policy aided the global stock market rally with the Nikkei 225 gaining 2.43% and the Hang Seng rising four-fifths of a percent.
“This typically happens after a kneejerk reaction to a conflict event,” said Jyotivardhan Jaipuria, MD, Valentis Advisors, referring to the global equities market surge a day after its adverse reaction to the Israel-Hamas conflict. “Markets are pricing in a localised conflict that won’t affect oil supply and so things will get hunky-dory.”
However, Jaipuria added that the markets at the current juncture were overvalued and could undergo a time correction with expectations of an 18-20% year on year earnings growth in Q2 moderating the valuations over a six to eight month period.
This was akin to the 18-month period during September 2021 to March 2023 when the market remained at the same level and valuations became cheaper as earnings improved.
Deepak Shenoy, CEO & founder of Capitalmind, said the event in West Asia was not a “major problem” and that his firm was “decently positioned” across sectors.
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First Published:10 Oct 2023, 10:04 PM IST
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