Sensex rebounds 887 pts as Omicron fears recede

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MUMBAI: The sensex reversed its two-session losing streak with an 887-point surge on Tuesday as fears about the impact of the Omicron variant on the global economy abated and financial stocks led during the day. The day’s rally, which helped the sensex close 1.6% higher at 58,634 points, was also backed by strong gains in the US market on Monday night, traders said.
Investors on D-Street are now keenly watching the decision of the RBI’s monetary policy committee (MPC), set to be announced on Wednesday morning. Additionally, a segment of market players is turning cautious as foreign portfolio investors (FPIs) are continuing to take money out of India.
According to Motilal Oswal Financial Services head (retail research) Siddhartha Khemka, Indian markets witnessed a sharp rebound on Tuesday on the back of positive global cues. “Comments from the US stating that the new virus (variant) might be less effective than earlier feared helped elevate global sentiments. Buying was witnessed in banking metals and auto stocks ahead of the RBI meeting on interest rates,” Khemka said.
Despite the rebound during the day, which recouped about half of the combined loss the index had recorded on Friday and Monday, the relentless selling is keeping market players cautious. So far in December, FPIs have taken out a net Rs 16,830 crore from the stock market, data from CDSL and BSE showed. This is the highest net monthly outflow from stocks since March 2020, just when the Covid-induced lockdown had led to one of the sharpest selloffs in the history of Indian market. “While markets have seen some relief, the overall volatility is likely to remain for some more time until FPI selling reduces. Investors should await cues from the global central banks for direction on the monetary policy as well as interest rates,” Khemka told MOFSL’s investors.
On Tuesday evening, the US market continued to add to its Monday’s gains as most leading indices were up more than 1.5% each. This could help add to sensex’s gains on Wednesday, market players here said. In Tuesday’s market, ICICI Bank, HDFC and HDFC Bank led the gains in the sensex with 29 of its 30 constituents closing higher. Outside of the sensex, BSE’s midcap index closed 1.3% higher while the smallcap index closed 1.1% higher. In the foreign exchange market, activity was relatively steady with the Indian rupee closing flat at 75.44 per dollar. With the RBI policy meet scheduled for Wednesday, there could be volatility in the forex market also, analysts said.

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