Indian equity markets staged an impressive comeback, erasing early losses to close significantly higher. The Sensex breached the 82,000 level, while the Nifty surged past 24,750, fuelled by a confluence of factors, including strong buying in heavyweight stocks, renewed foreign institutional investor (FII) interest, and positive global sentiment.
Market drivers:
The rally was spearheaded by heavyweight IT stocks, with TCS, Infosys, Wipro, and Tech Mahindra leading the charge. This surge was triggered by positive remarks from US Federal Reserve Chairman Jerome Powell, who expressed confidence in the resilience of the US economy. The upbeat outlook for the world's largest economy boosted risk appetite globally, encouraging investors to embrace equities.
Other notable gainers included Titan Company, Dr Reddy's Laboratories, and SBI, reflecting broad-based buying across sectors. This renewed investor confidence in blue-chip companies signals a potential shift in market sentiment.
FII flows turn positive:
Adding to the market's momentum was the return of foreign institutional investors (FIIs) as net buyers. After months of relentless selling, FIIs have infused over Rs 5,224 crore into Indian equities in December, a significant reversal from the massive outflows witnessed in October and November. This renewed FII interest, coupled with consistent buying from domestic institutional investors, has injected much-needed liquidity into the markets.
Macroeconomic optimism:
The rebound in Indian markets aligns with a broader risk-on sentiment in global equities. The Dow Jones Industrial Average crossed the 45,000 mark for the first time, buoyed by robust US economic growth and easing inflation concerns.
In India, optimism is also brewing about the domestic macroeconomic landscape. Market participants are hopeful that the Reserve Bank of India (RBI) may signal the start of a rate-cutting cycle in its upcoming monetary policy review.
Expert commentary:
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, attributed the market's resurgence to positive global cues and strong FII buying. He highlighted the significance of Fed Chair Powell's optimistic remarks, which have bolstered investor confidence.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, pointed to the easing selling pressure from FIIs and improving growth expectations for the second half of the fiscal year as key drivers of the market's recovery.
The strong rebound in Indian equity markets signals a potential turning point after months of uncertainty and volatility. The combination of positive global cues, renewed FII interest, and optimism about the domestic macroeconomic environment has created a favorable backdrop for further market gains. While some caution remains as investors await the RBI's monetary policy decision, the overall sentiment is decidedly upbeat. The market's resilience and ability to bounce back from recent lows underscore the long-term growth potential of the Indian economy and the attractiveness of its equity markets for both domestic and international investors.
