- Indian stock market indices, Sensex and Nifty, experienced a significant rally last Friday, marking a strong recovery.
- The rally was attributed to improved investor sentiment and stock-specific activities, with sectors like pharma, healthcare, and commodities emerging as major gainers.
- Market experts noted that the anticipated slowdown in India's Q2 GDP has already been reflected in Q2 corporate earnings, which the market appears to have discounted.
- Despite the anticipated slowdown in the Q2 GDP, the market has shown signs of recovery, but the sustainability of this rally remains uncertain due to subdued global sentiment and ongoing inflation concerns.
The Indian stock market ended on a high note last Friday, with both the equity benchmark indices, Sensex and Nifty, experiencing a significant rally. This surge marked a strong recovery from the previous session's sell-off, which was attributed to the expiry of futures and options (F&O). The Sensex closed at 79,802.79, reflecting a gain of 759.05 points or 0.96 per cent. Concurrently, the Nifty closed at 24,131.10, registering a gain of 216.95 points or 0.91 per cent. This upward trend in the domestic stock market was primarily driven by improved investor sentiment and stock-specific activities.
Key Drivers of the Rally
The Nifty Bank index also saw an increase, rising by 148.75 points or 0.29 per cent to 52,055.60. The Nifty midcap 100 index closed at 56,392.65, marking a gain of 91.90 points or 0.16 per cent. The Nifty smallcap 100 index closed at 18,650.95, after a rise of 139.40 points or 0.75 per cent. Market experts have attributed this rally to a variety of factors. They noted, "A large-cap-driven, broad-based rally ensued in the domestic market."
Discretionary sectors performed well, benefiting from the festive season. The pharma and healthcare sectors saw renewed growth, supported by strong earnings and a moderation in valuations after recent corrections. The experts also pointed out that the anticipated slowdown in India's Q2 GDP to 6.5 per cent has already been reflected in Q2 corporate earnings, which the market appears to have discounted. They added, "Meanwhile, global sentiment remained subdued due to the appreciation of the Japanese yen, as inflation stayed above the central bank's tolerance level."
Sectoral Performance and Market Trends
On the sectoral front, pharma, healthcare, commodities, infra, media, energy and auto emerged as major gainers. However, PSU bank and realty sectors were the major losers. In the Sensex pack, Bharti Airtel, Sun Pharma, M&M, Ultra Tech Cement, Adani Ports, L&T, JSW Steel, Hindustan Unilever Limited and Titan were the top gainers.
On the other hand, Power Grid, Nestle India, SBI and Infosys were the top losers. On the Bombay Stock Exchange (BSE), 2334 shares were traded in green and 1,608 in red. Interestingly, there was no change in 127 shares.
This surge in the Indian stock market is reminiscent of similar historical events. For instance, in 2017, the Sensex and Nifty witnessed a similar rally, driven by positive investor sentiment and strong corporate earnings. The sectors that gained the most during that rally were also similar, with pharma, healthcare, and commodities leading the way.
