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The Indian stock market experienced a significant surge on November 22nd, with the Sensex soaring 878.54 points (1.14 percent) to reach 78,034.33, and the Nifty climbing 277.90 points (1.19 percent) to 23,627.80. This robust rally was primarily driven by a vibrant performance in the banking, information technology (IT), and realty sectors. The overall market sentiment was upbeat, contributing to the strong positive momentum. Only Axis Bank and Sun Pharma showed losses among Nifty stocks, a testament to the widespread gains across various sectors. This market upswing follows a period of uncertainty and volatility, particularly due to the Adani Group's recent controversies and the sustained selling by Foreign Institutional Investors (FIIs).
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, offers valuable insight into the current market dynamics. He acknowledges the significant headwinds the market faces, including the ongoing Russia-Ukraine war and the prolonged FII sell-off, yet emphasizes the fundamentally positive overall outlook. He points out that the market's correction from its September peak is relatively modest (around 11 percent), suggesting a correction rather than a crash. The bullish US market, with a 25.43 percent year-to-date (YTD) return, further supports the global positive undertone. Vijayakumar also highlights that while the recovery is possible from the Adani-driven selloff, a sustained recovery is unlikely due to ongoing challenges. He distinguishes between the strength in the broader market, particularly midcaps, which he attributes more to liquidity than fundamental strength, and large-cap stocks in banking and IT which he considers fundamentally sound. Sectors like FMCG, metals, and oil & gas appear relatively weak.
The rally was notably broad-based, with all NSE sectoral indices participating. Public sector banks, recovering from yesterday’s decline fueled by concerns over their Adani Group exposure, saw gains of up to 3 percent, buoyed by strong performances from SBI, Bank of Baroda, PNB, and Canara Bank. Private banks like ICICI Bank, HDFC Bank, and IndusInd Bank also performed exceptionally well. The Nifty Realty index continued its upward trend for the third consecutive session, boasting a remarkable 27 percent YTD return, significantly outperforming the Nifty's approximately 9 percent gain. The IT sector rallied strongly, fueled by positive US labor market data, bolstering investor sentiment. Remarkably, most Adani Group stocks made a significant turnaround, climbing as much as 3-4 percent, reversing the previous day's massive sell-off triggered by bribery allegations in the US. This reversal shows a resilience despite negative news.
Further contributing to the positive market sentiment, Paytm, a fintech player, saw a significant surge of over 5 percent, extending its gains for a fifth trading session. This positive performance is attributed to a bullish call from Bernstein, an international brokerage firm, which revised its target price for Paytm to Rs 1,000 per share from Rs 750, reflecting a shift in narrative from survival concerns to optimism. State Bank of India (SBI), India's largest public sector lender, was the top Nifty gainer, rising over 3 percent. Jefferies reaffirmed its 'buy' rating with a target price of Rs 1,030, implying a potential 29 percent upside. Jefferies cited the scope for improvement in SBI's loan-to-deposit ratio as a key factor driving their bullish outlook. Praj Industries also showcased a strong performance, surging over 9 percent after projecting a threefold revenue growth by 2030, driven by the growing interest in energy transition.
The broader market also participated in the rally, with mid-cap and small-cap indices opening with gains of 0.8 percent each. However, Vijayakumar cautioned against excessive optimism, warning that many companies in this segment are trading at potentially unsustainable 'bubble valuations.' The India VIX, a volatility index reflecting market anxiety, cooled off by 3 percent, falling below the 16 levels, further indicating a decline in market uncertainty. Anand James of Geojit Financial Services highlighted that while yesterday’s improved risk appetite prevented further declines, stronger upward movement requires the market to break the 23,480-23,565 range. He outlined potential scenarios, including further gains to 23,390 or a possible revisit of levels between 23,100 and 22,800 depending on the market’s performance.
In conclusion, the Indian stock market demonstrated a robust recovery on November 22nd, driven by strong performances in banking, IT, and realty sectors, coupled with a rebound in Adani Group stocks. While experts caution against excessive optimism and highlight potential challenges, the overall market sentiment appears positive, although it remains to be seen whether this positive momentum will be sustained in the face of ongoing global uncertainties.