Markets: Global sentiment up, Sensex gains 900 points; Adani stocks rally
Virendra Pandit
New Delhi: With a bull run on Dalal Street on the current week’s last trading day on Friday, the S&P BSE Sensex gained 900 points (1.6 percent) closing at 59,809 points in intra-day trade, while benchmark index Nifty50 rallied over 272 points (1.6 percent) to close at 17,594, as all sectors swam in the green sea because of a combination of factors strengthening global sentiments.
The bull run is attributed to a strong global mood, steamy Adani stocks, and a technical pullback. Together, these factors show the investors’ confidence in Indian markets remains intact.
This is despite Prime Minister Narendra Modi’s warning on Thursday during the G-20 Foreign Ministers Meeting (FMM) that global governance has collapsed and multilateralism is in crisis, pointing to the global challenges ahead.
The US Fed Atlanta President Raphael Bostic’s comments favoring quarter-point hikes sparked Wall Street as traders shed rate hike concerns. A few days after the February minutes reading, his comments indicated a hawkish stance. Key indices like Dow Jones, NASDAQ Composite, and the S&P 500 climbed up to 1 percent overnight, showing a strong global mood.
The strength spilled across markets in Asia-Pacific too, as Nikkei 225, Topix, the S&P 200, Kospi, Kosdaq, Hang Seng, and Shanghai Composite indices climbed 1 percent this morning.
The second reason for the spike is the Adani Group companies’ shares rallying up to 10 percent in Friday’s intra-day trade, lending support to the benchmark indices. It came after the conglomerate’s promoters sold shares worth Rs 15,446 crore in four of its listed entities to GQG Partners, a US-based global equity-investment boutique firm led by Indian-American Rajiv Jain, who built his USD 92 billion empires since he went there in 1990, the media reported.
While shares of flagship firm Adani Enterprises surged 10 percent, Adani Transmission, Adani Power, Adani Green Energy, Adani Wilmar, and NDTV were locked at 5 percent upper circuit. This development is expected to support public sector lenders as traders feared their exposure to the Adani Group companies.
The markets heaved a sigh of relief after the USD 2 billion investment by GQG partners in the Adani Group. This laid out a floor for this group’s stocks since a marquee investor has invested in them at these prices. Also, promoters can use this money to infuse capital in any group company requiring the funds through warrants, rights issues, or any other instrument, an expert said.
This fresh development should also support the banks, especially the PSBs, which faced rough weather despite good performance because of fear of their exposure to the Adani group, Naveen Kulkarni, Chief Investment Officer, Axis Securities, said.
About the technical pullback, market experts say the NSE Nifty index could form a strong base in the 17,200-16,800 range, with a key challenge hurdle of 17,800. Sustainability above this would lead to upward momentum towards 18,300 this month.
On Friday, broader markets jumped in tandem as Nifty Midcap 100 and Nifty Smallcap 100 indices climbed up to 0.9 percent. The volatility index, India VIX, however, slipped over 6 percent. Nifty PSU Bank and Nifty Metal indices led the charge as they advanced up to 5 percent.
But some analysts apprehend aggressive foreign fund outflows keeping the markets volatile because of bleak near-term expectations.
Dr. V.K. Vijaykumar, Chief Investment Strategist at Geojit Financial Services said the markets may continue to remain under pressure from foreign institutional investors (FIIs’) selling. On Thursday, it was Rs 2,676 crore, excluding the GQG bulk buying of Adani stocks worth over Rs. 15,000 crores.
The US 10-year yield has moved above 4 percent. The FIIs might sell more since this risk-free return is attractive considering the muted short-term expectations from the equity markets. The FII selling will be an opportunity for long-term investors to accumulate high-quality stocks, particularly in banking, he added.
