Stocks Bounce Back: Reliance and Metals Drive Recovery
India's stock market experienced a positive turnaround on Thursday, breaking a three-day losing streak. This recovery was primarily driven by significant gains in Reliance Industries Ltd. and various metal stocks. The Nifty 50 index climbed by 1.17% to reach 24,765.90, while the BSE Sensex increased by 1.14% to settle at 80,015.90. This resurgence in the market was noted as fifteen out of sixteen major sectors reported gains.
Investors were relieved as the broader small-cap and mid-cap indices also saw increases of 1.6% and 1.5%, respectively. The equity benchmarks had previously declined by about 4% since last Friday, mainly due to the heightened tensions from the Iran war, which drove crude oil prices up and raised inflation concerns.
Shares of Reliance Industries surged by 3.3% after the company faced a decline of approximately 4.5% in the preceding sessions. Analysts from JM Financial and CLSA suggested that the recent correction in Reliance's stock was excessive. Anita Gandhi, head of institutional business at Arihant Capital Markets, commented that the market's uptick represented a temporary bounce, greatly influenced by Reliance's recovery.
Reliance's gains also positively impacted the energy and oil and gas sectors, lifting their indexes by 1.9% and 1.6%, respectively. Out of the 3,336 stocks listed on the NSE, around 2,210 saw advancements, overshadowing the decline of 1,039 stocks.
Gandhi pointed out that today's rise is attributed to attractive valuations following the recent selloff, alongside easing fears concerning crude supply after U.S. President's statements about protecting crude flows. However, she noted that market uncertainty is likely to continue due to the ongoing conflict.
On an individual stock level, Hindalco Industries Ltd. and Nalco Ltd. experienced impressive jumps of 3.6% and 6%, respectively, propelling the metal index up by 2.3%. This increase was driven by rising aluminum prices amidst supply concerns, particularly after Aluminium Bahrain halted shipments due to a shipping freeze in the Strait of Hormuz.
In other market news, shares of Vodafone Idea Ltd. (Vi) rose by as much as 3.60% following reports that the Department of Telecommunications is completing a reassessment that could reduce license fees significantly. Meanwhile, Cera Sanitaryware Ltd. announced a provisional 50% reduction in gas supply due to the Iran war, though it maintains a separate supply arrangement to mitigate impacts on production.
Despite the recovery, analysts continue to monitor the situation closely, as the rupee showed some recovery against the U.S. dollar, gaining 48 paise to trade at 91.57 early on Thursday. However, the overall sentiment remains cautious due to the ongoing global tensions and their potential impact on the Indian economy.
