Market Wrap: Dalal Street settles in green amid hope of lower rate hikes by Fed, recovery in China

Rally in stocks on the final day of the week helped markets to close the week in green terrain as investors opted to buy beaten-down but fundamentally strong shares after recent hammering. The market got a boost after comments from a Federal Reserve official raised hopes that the Fed will stick with a 25 basis rate hike at its next meeting in March. 

Market participants also remained hopeful for a steady economic recovery in China after a private survey showed activity in the country’s services sector expanded at the fastest pace in six months in February. Also, a report that the seasonally adjusted S&P Global India Services PMI Business Activity Index surged to 59.4 in February from 57.2 in January. These signals led the BSE Sensex to surge 345 points, or 0.6 per cent, at 59,809 during the week ended March 3, while the Nifty advanced 129 points, or 0.7 per cent, to 17,594.4.

Vinod Nair, Head of Research at Geojit Financial Services, said: “Worries over aggressive rate actions in the US kept global markets in check as data releases suggested possibilities of inflation remaining elevated for a longer period.” He said global investors’ interest in equity markets weakened owing to fears of an economic slowdown led by high inflation and contractionary monetary policies. “This has triggered the US 10-year bond to rise above 4%, driving foreign money out of emerging countries. However, the trend got reversed towards the end of the week as a Fed official commented on the possibility of a favourable rate hike in the next meeting,” he said. 

Additionally, Nair said the oversold state of the domestic market, along with encouraging macro-economic data and reports of foreign investment in Adani stocks, added optimism. “The manufacturing PMI reported better than predicted at 55.3, while the services PMI expanded to its 12-year high of 59.4. However, India’s Q3 FY23 GDP statistics came in slightly below expectations at 4.4 per cent,” he added.

As many as 22 stocks in the Nifty 50 index delivered a positive return for investors in the week ending March 3. With a gain of 22.4 per cent, Adani Ports emerged as the top gainer in the index. It was followed by State Bank of India (up 7.7 per cent), IndusInd Bank (up 4.4 per cent), ICICI Bank (up 3.5 per cent), and Power Grid Corporation of India (up 3.3 per cent). Asian Paints and Kotak Mahindra Bank also advanced over 3 per cent. On the other hand, Cipla, Infosys, and UPL declined 8.8 per cent, 4.6 per cent and 3.8 per cent, respectively.

Sector-wise, the BSE Realty index gained the most (8.2 per cent) during the week gone by. BSE Bankex and BSE Power indices have also given a 3.2 per cent return each while BSE Information Technology, BSE TECk, and BSE Healthcare indices have registered a weekly decline of 2.3 per cent, 2.1 per cent and 1.4 per cent, respectively.

Deepak Jasani, Head of Retail Research at HDFC Securities said that the Nifty rebounded sharply on Friday after a down day aided by positive global cues. At close, Nifty was up 1.57% or 272.5 points at 17594.4. “Broad market indices rose less than the Nifty even as the advance-decline ratio remained positive at 2.09:1. Bulk deals in Adani group stocks on Mar 2 attracting FPI buying seems to have improved market sentiments,” he said, adding that most global stocks inched higher and started March on a high note as markets digested more signals on the US monetary policy and positive Chinese economic data.

Jasani said Nifty rose sharply as expected and now could head towards the 17,772-17,924 band. On falls 17,468 and later 17,303 could offer support. “Breadth of the market needs to improve consistently and the broad market indices need to catch up with the frontline indices. Cyclical sectors are back in favour due to value buying by investors,” Jasani Added.

The rally on Friday was led by banking stocks. Kunal Shah, Senior Technical Analyst at LKP Securities, said: “The Bank Nifty bulls came back strong and surpassed the hurdle of 40,800 with a sharp surge in volumes. The momentum indicator has given a positive crossover on the daily chart which confirms the buy signal. The index is likely to touch the level of 42,000 where fresh call writing has been observed.”

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