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The Indian stock market experienced a strong recovery on Tuesday, driven by optimism surrounding potential stimulus measures from China and short covering ahead of the US election results. The Sensex, a key benchmark index, closed at 79,476, marking a gain of 694 points or 0.88 percent. The Nifty, another major index, rose 0.91 percent to finish at 24,213. This rebound followed Monday's decline, demonstrating market resilience despite uncertainty surrounding the US presidential election.
The rally was notably led by metal and banking stocks. JSW Steel, Tata Steel, and Hindalco were among the top gainers in the Nifty index, with JSW Steel recording a 4.6 percent increase. These sectors' strong performance was attributed to positive developments in China's steel sector, with the national steel PMI reaching 54.6 in October, signifying an expansion for the first time since March 2023. This optimistic data fueled buying interest in metal stocks, according to Deepak Jasani, Head of Retail Research at HDFC Securities.
However, despite the overall market rebound, Foreign Portfolio Investors (FPIs) continued their selling spree on Tuesday, offloading shares worth Rs 2569 crore. This activity indicates a cautious stance from foreign investors, despite the positive market sentiment. Vinod Nair, Head of Research at Geojit Financial Services, attributed the market recovery to the uncertainty surrounding the potential downgrade in Q2 GDP forecast and the closely contested US presidential election. However, he highlighted that the recent rebound in domestic manufacturing activity data, along with the expected revival of consumption in H2, could provide support to market sentiment.
The positive trend in the Indian market mirrored broader Asian market performance. Most Asian markets experienced gains on Tuesday, while European indices fluctuated between gains and losses as investors assessed a series of disappointing earnings reports. Hong Kong and Shanghai markets saw increases exceeding two percent each, fueled by data indicating that China's services sector expanded at its fastest pace since July. This positive economic performance aligns with China's plans to inject an additional $140 billion in extra budget spending to stimulate growth.
The Indian stock market's recovery demonstrates its responsiveness to both domestic and international economic developments. The market's resilience amidst uncertainties surrounding the US elections and potential GDP downgrades, coupled with positive signals from China's economic recovery, points toward a continued, albeit volatile, path for Indian equities in the near future.
Source: Indian equities rebound on China stimulus, short covering