Domestic equity equity took a sharp relief rally on Friday after Adani stocks rout. Optimism over easing inflation, nearing of the end of interest rate hike cycle and buying in financial stocks pushed the markets higher. Traders cheered strong earnings for the index heavyweights.
For the day, the 30-share pack BSE Sensex rallied 909.64 points, or 1.52 per cent, to 60,841.88, whereas Nifty50 Index settled at 17,854.05, rising 243.65 points, or 1.38 per cent. However, broader markets underperformed as BSE midcap and smallcap indices settled in red. India VIX dropped sharply about 9 per cent to 14.4-level.
Adani Group’s cash stocks continued to bleed as Adani Transmission and Adani Green Energy plunged 10 per cent. Adani Power, Adani Total Gas and Adani Wilmar were down 5 per cent each for the day.
However, Adani Enterprises recovered about 55 per cent from day’s low to settled 2 per cent lower on Nifty50 but rose over a per cent on BSE. Adani Ports recovered 25% from day’s low and settled up to 8 per cent higher.
The markets were already in the grip of a sharp intra-day volatility over the past week or so and hence the recovery was highly anticipated. While banking and auto stocks led the upsurge, weakness in energy, oil & gas and power stocks show the pain continues in the broader market, said Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities
“Technically, for Nifty traders, the immediate hurdle would be the 20-day SMA at 17,950. As long as the index is trading above 17,700, the pullback formation is likely to continue above which it could move up to 18,000. On further upside the index could move up to 18,150. On the flip side, below 17,700 the weak sentiment is likely to accelerate,” he said.
On a sectoral front, Nifty PSU bank index soared 3 per cent, whereas financial services and private bank indices were up 2 per cent each. Auto index added over a per cent. Among the losers, pharma and reality indices dropped a per cent each, with metal and media indices being other key laggards.
Barring the Adani Group stocks, Titan surged 7 per cent, most among the Nifty50 index. Bajaj Fiserv and Bajaj Finance jumped 5 per cent each, whereas HDFC, State Bank of India, HDFC, Either Motors, IndusInd Bank and Mahindra & Mahindra gained 3 per cent each.
Among the losers, Divis Labs bled 12 per cent after poor results in December 2022 quarter. Bharat Petroleum and Tata Consumer were down 2 per cent each, whereas Hindalco, HDFC Life and Wipro were other key laggards in the index.
Domestic equities are also rising as a result of dovish comments from global central banks. The European Central Bank (ECB) and the Bank of England (BoE) followed suit a day later after the United States Federal Reserve acknowledged in its monetary policy meeting on Wednesday that the disinflationary process may have begun, said Choice Broking in its note.
“At its policy meeting on February 8, the Reserve Bank of India is expected to raise the key policy repo rate by 25 basis points, signaling the end of a nearly year-long tightening cycle. We expect the market to be quite volatile. We advise you to use a stock-specific method,” it said.
A total of 36,68 stocks traded for the day on BSE, of which 2,174 settled lower, while 1,359 settled higher. Remaining 135 stocks ended unchanged. A total 150 stocks hit an upper circuit on BSE, whereas 255 stocks hit the lower circuit during the trading session.
In the broader markets, Hindustan Construction Company tanked 19 per cent after flow show in Q3, whereas Stove Kraft tanked 13 per cent. SH Kelkar tumbled 12 per cent, whereas Swan Energy, Crompton Greaves and Hindustan Copper shed 7-8 per cent each.
On the contrary, Sagar Cement surged 12 per cent, whereas Karantaka Bank hit an upper circuit of 10 per cent after strong results in December 2022 quarter. Mahindra Lifesciences and Aavas Financers ended 8 per cent each higher each.
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