The domestic equity benchmarks made a stellar recovery, as benchmarks ended higher by 0.99-1.12% on Thursday. The broader Nifty50 gained 174.35 points (0.99%) to end at 17,798.75, while the Sensex rose by 659 points (1.12%) to settle at 59,688. Apart from global triggers, the support came from within.
1. Bank, financial stocks’ outperformance
Bank and financial stocks outperformed on Friday as the rally on Dalal-street largely revolved around them. ICICI Bank, Axis Bank, SBI and Bajaj twins led the banking indices. Even Nifty Bank closed past 40,200. Nifty PSU Bank rose 2.5%, while Private Bank and Nifty Bank gained 1.88% respectively and 1.91%.
“The domestic financial market experienced a wave of optimism tracking strength across global markets as oil prices eased, cooling investor concerns about rising inflation,” said Vinod Nair, Head of Research at Geojit Financial Services.
Banking and Financial stocks outperformed as bond yields fall due to a fall in crude oil prices, said Santosh Meena, Head of Research, Swastika Investmart Ltd. on Market
2. FIIs consistent buying
After turning net buyers with over 51,000 crore worth equity purchase in the Indian market in August, the FIIs were also net buyers in the last two sessions. The FIIs bought shares worth Rs 1902.9 crore in between September 6 and 7. However, they remained net sellers this month so far as they pulled out Rs 1,207.95 crore from the Indian market till September 7.
Despite premium valuations, consistent FII inflows are aiding Indian bourses to stay resilient, said Nair.
“There is a clear message from the market now. Despite high valuation, global headwinds from elevated inflation, slowing global economy and an ultra-hawkish Fed, the domestic market has been surprisingly resilient. The tape is signalling momentum and bullishness,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
3. Rally in small cap stocks
Apart from banking and financials, a consistent rally has been seen in the broader market, especially small cap stocks. Despite volatility, Nifty small cap index has gained over 3% in the past one month and over one per cent on Thursday alone. Nifty Midcap ended higher by 0.35% today.
4. Softening oil prices
The international oil benchmark Brent crude dipped 0.49 per cent to $87.57 per barrel on Thursday. Earlier, Oil prices fell more than $1 on Wednesday to their lowest since Russia invaded Ukraine as COVID-19 curbs in top crude importer China and expectations of more interest rate hikes spurred worries of a global economic recession and lower fuel demand. Brent crude futures fell $1.35, or 1.5%, to $91.48 a barrel by 0420 GMT after slipping 3% in the previous session. The contract hit a session low of $91.35, the lowest since February 18, said a Reuters report.
A sharp cut in crude oil prices is another big tailwind for the Indian equity market, said Santosh Meena
5. Record demat accounts
Total numbers of demat accounts on stock market depositories— Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL) — surpassed 10 crore for the first time in the month of August 2022. This is a 60% jump in demat accounts from pre-Covid numbers, which stood at around four crore.
“Positive Global Cues with Cooling Oil prices and all-time high demat account openings in the country helped pull the sentiments in favour of Bulls as BFSI coupled with the PSU Banks led the charge today with a percentage gain in the Nifty,” said S Ranganathan, Head of Research at LKP securities.