Nifty and Sensex Bounce Back Led by Reliance and Metals
India's stock market made a strong comeback on Thursday, ending a three-session losing streak. The rise was led by Reliance Industries Ltd. and metal stocks, as global markets showed signs of recovery after a significant selloff triggered by the ongoing Iran war. The Nifty 50 surged by 1.17% to reach 24,765.90, while the BSE Sensex climbed 1.14% to hit 80,015.90. In a positive development, fifteen out of sixteen major sectors reported gains, indicating a broad-based recovery.
The broader market also performed well, with small-cap stocks increasing by 1.6% and mid-cap stocks rising by 1.5%. This turnaround comes after the equity benchmarks had seen about a 4% decline since Friday, primarily due to inflation concerns arising from higher crude oil prices linked to the conflict in Iran.
Shares of Reliance Industries rose by 3.3%, recovering from a previous dip of about 4.5% over the last three sessions. Analysts from JM Financial and CLSA noted that the recent drop in Reliance's stock was overdone, leading to this rebound. Anita Gandhi, head of institutional business at Arihant Capital Markets, remarked that today's market uptick is likely a temporary bounce, primarily driven by Reliance's recovery.
Gains in Reliance also propelled the energy and oil and gas sectors higher, with increases of 1.9% and 1.6% respectively. Of the total 3,336 stocks in the NSE universe, about 2,210 advanced, overshadowing the decline of 1,039 stocks.
Analysts suggested that today's rise is attributable to attractive valuations following the recent selloff and easing fears regarding crude oil supply. Comments from the U.S. President about protecting crude flows have helped calm some of the market's worries, although uncertainty remains due to the ongoing conflict.
Among individual stocks, Hindalco Industries and Nalco saw significant gains of 3.6% and 6% respectively, pushing the metal index up by 2.3%. This surge in metal stocks is attributed to rising aluminum prices resulting from supply concerns, especially after Aluminium Bahrain halted shipments due to a shipping freeze in the Strait of Hormuz.
Meanwhile, shares of Vodafone Idea Ltd. surged by 3.60% following reports of a reassessment by the Department of Telecommunications that could reduce license fees significantly. Despite some disruptions in gas supply reported by Cera Sanitaryware, the company expects to maintain normal operations due to adequate inventory levels.
As the rupee recovered from its lowest point, gaining 48 paise to trade at 91.57 against the U.S. dollar, the overall sentiment in the domestic equity markets remained cautious due to rising crude oil prices and foreign investor selling. Analysts, however, remain hopeful about the market's resilience amidst these challenges.
