Following a 1% decline the day before, the Indian benchmark equity indices, the Sensex and Nifty50, increased on Wednesday thanks to increases in IT, banking, and auto stocks. However, concerns about foreign fund outflows may limit further gains.
Key Highlights
- Investor wealth increased by about ₹4 lakh crore as the NSE Nifty surpassed 24,900 and the BSE Sensex surged over 800 points.
- With notable contributions from banking, automotive, IT, and pharmaceutical stocks propelling the market's upward momentum, all 13 major sectors ended the day in the green.
Shares in the Nifty50 added 240 points or 0.98%, to reach 24,924 points and the BSE Sensex climbed 814 points or 0.87%, to 82,000.
All the companies on the BSE now have a market cap of Rs 441.67 lakh crore which is an increase of Rs 3.64 lakh crore.
Among individual stocks, Ircon International rose 3% after announcing a Rs 253.6 crore contract with South Western Railway to implement KAVACH, an indigenous train collision prevention system.
Following the signing of a lease agreement with Ilios Breweries Pvt. Ltd. to increase its manufacturing capacity in Andhra Pradesh, United Breweries Ltd. (UBL) saw a 2.3% increase in share price.
On the sectoral front, the Nifty Auto, Bank, FMCG, Pharma, and Realty indices opened up to 1.5% higher, while Consumer Durables and Oil & Gas saw a 0.7% decline.
Preliminary data indicates that the Nifty50 and BSE Sensex fell on Tuesday as a result of foreign portfolio investors selling shares valued at Rs 10,016 crore ($1.2 billion). This was the biggest single-day outflow since February 28.
The sell-off was probably brought on by stretched valuations in Indian stocks as well as rising bond yields in the US and Japan.
While long-term Japanese government bond yields dropped after hitting record highs on Tuesday due to worries about funding for new fiscal stimulus, U.S. bond yields increased slightly overnight on worries that a tax-cut bill under consideration in Congress will worsen the budget deficit.
Expert Opinion
An increase in risk and uncertainty is having an unexpected effect on the market. The FII sell figure of Rs 10016 crores yesterday represents a significant reversal of their large purchases in May, and if it continues, it could have an effect on the market, according to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.
Why did the FII activity suddenly reverse? Numerous factors could be at play, including the downgrade of US sovereign debt's credit rating and the resulting increase in US bond yields, the rise in Japanese government bond yields, the rise in COVID cases in some regions of India, and rumors of a potential Israeli attack on Iran. Investors are free to observe and wait for the events to transpire," Vijayakumar continued.
"A sustained move above the 24,700 level could reignite bullish momentum, potentially pushing the index higher to the 24,850-25,000 range," said Hardik Matalia, Choice Broking's derivative analyst. "On the downside, 24,500 and 24,350 show immediate support and, if tested, could be attractive accumulation areas for long positions."
