Experts suggest that strong buying by domestic institutional investors (DIIs) and a positive trend in the US markets also supported the indices
Indian markets witnessed their biggest single-day rally in over five months, following seven weeks of correction. On Friday, the benchmark equity indices rebounded sharply, overcoming various concerns, including Gautam Adani's bribery case. The Sensex surged by 2.54 per cent, regaining the 79,000 level, driven by a broad-based rally and value buying at lower levels.
Experts suggest that strong buying by domestic institutional investors (DIIs) and a positive trend in the US markets also supported the indices.
The BSE benchmark Sensex jumped 1,961.32 points or 2.54 per cent to settle at 79,117.11. During the day, it surged 2,062.4 points or 2.67 per cent to reach 79,218.19. Meanwhile, the NSE Nifty soared 557.35 points or 2.39 per cent to close at 23,907.25. All sectoral indices ended in the green, with Nifty IT surging over 3 per cent, on the back of strong US labor market data. Initial jobless claims fell by 6,000, marking a seven-month low, signaling a rebound in US job growth after last month's slowdown.
Value buying in blue-chip stocks also contributed to the rally, with several index heavyweights, including Reliance, making significant gains. The broader markets joined the rally, with midcap and smallcap indices gaining nearly 1 per cent each.
However, Foreign Institutional Investors (FIIs) continued to be net sellers, pulling out nearly Rs 40,000 crore in the month to date.
On Thursday, bribery charges against Gautam Adani had weighed on market sentiment, causing the benchmark Nifty 50 to slump 168.60 points or 0.72 per cent to 23,349.90.
Vinod Nair, Head of Research at Geojit Financial Services, stated that the market saw a significant broad-based rally, largely led by large-cap stocks, as their valuations appeared attractive with expectations of improving corporate earnings in the second half of the fiscal year.
"Positive momentum was also observed in global markets due to a modest decline in Japan's October inflation and a 39 trillion yen stimulus package. Moderation in global and domestic political drama provided a relief to the domestic market," he added.
Despite these concerns, experts believe today’s rally indicates that the market has moved past the Adani issues and is looking forward. On the other hand, the Russia-Ukraine war has escalated, with Russia even firing Intercontinental Ballistic Missiles. The relentless selling by FIIs continues, with the selling spree reaching a record 38 consecutive days. Experts suggest that while the market may recover from the current levels, as yesterday's selling was largely a result of the Adani issue fallout, a sustained recovery may be challenging considering the headwinds the market is facing.
Looking ahead, the market will react to the outcome of State Assembly elections in Maharashtra and Jharkhand, along with other global triggers, including developments in the Russia-Ukraine war. Exit polls indicate a likely BJP-led Mahayuti win in the Maharashtra Assembly elections.
“In the near term, we expect volatility to continue in the market, driven by triggers such as State election results, FII activity, and global geopolitical concerns,” said Siddhartha Khemka, Head of Research - Wealth Management at Motilal Oswal Financial Services Ltd.