stock: D-Street indices gain nearly 1% on Fed signal, fall in US bond yields

Mumbai: India’s stock benchmarks rose nearly 1% on Monday, mirroring the strength in global markets, which have begun pricing in the likelihood of the US Federal Reserve bringing an end to its rate hike cycle. The dip in US treasury yields below 4.5% on Friday – its lowest in five weeks – after the recent surge also lifted sentiment. But investors’ conviction will be put to test with various American central bank officials scheduled to speak over the next few days.

BSE’s Sensex gained 594.91 points, or 0.92%, to close at 64,958. NSE’s Nifty rose 181 points or 0.94% to end at 19,411.

Last week, the Fed toned down its hawkish stance and US jobs data showed signs of moderation, pushing Treasury yields down and driving a rally on Wall Street on Friday.

“Although the Fed commentary was mixed, the lack of rate hike has led the markets to believe that the US interest rates may have peaked in the short-term,” said Sidhartha Khemka, head of retail research, broking, and distribution, Motilal Oswal. “The US bond yields and crude prices have also cooled off, which points to supportive global cues.”

Agencies

Elsewhere in Asia, markets ended firm with the Shanghai Composite gaining 0.9%, Hong Kong rising 1.7%, South Korea surging 5.7% and Indonesia up 1.3%. The pan-Europe index Stoxx 600 ended almost flat.The Sensex and Nifty have gained nearly 3% each since October 26 after dropping almost 5% in the previous six trading sessions as the rise in benchmark US 10-year treasuries to 5% for the first time in 16 years and the West Asia conflict intensified risk-off sentiment. The Nifty closed below 19,000 on October 26 for the first time since June 28.

At 19,000, the Nifty went below its five-year average Price to Earnings (PE) ratio, which prompted the markets to bounce, said Amit Gupta, senior vice president and fund manager, ICICI Securities. “Although some consolidation is expected moving forward, the Nifty is likely to be above 21,000 levels towards the end of this financial year,” he said.Comments by Fed policymakers, including chairperson Jerome Powell, in the coming days could decide the direction of the financial markets globally.

On Monday, NSE’s Mid-cap 150 index advanced 0.9% and the Small-cap index moved up 1.1%. Out of the 3,964 stocks traded on the BSE, 2,422 gained, while 1,381 ended lower.

Foreign portfolio investors were sellers of shares to the tune of ₹549 crore on Monday, while their domestic counterparts bought shares worth ₹596 crore.

The NSE’s Volatility Index rose 2% to 11.11, suggesting options traders see higher risks to the market in the near term.

Khemka said aggregate earnings in the September quarter have been strong and upcoming festive demand is also supporting the rebound.

“Overall, the net profit has been higher than expectations and the commentary for the festive season is also positive,” said Khemka.

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