A broad-based rally on Wednesday propelled the benchmarks to their best close since February 10, even as prices of crude oil clawed back after Russia gave an indication of de-escalation in hostilities. With Wednesday’s gain of 1.3%, the Sensex has added 2.3% over the last three sessions. After two days of decline, Brent crude gained 3.8% and is currently hovering at $114.39 per barrel.
While the Sensex surged 740.34 points to settle at 58,683.99 points on Wednesday, the Nifty50 gained 172.95 points or 1% to end at 17,498.25. With 3.8% gains, Bajaj Finserv rallied the most on both the Sensex and Nifty50. While its subsidiary Bajaj Finance rose over 3%, HDFC Life Insurance and Tata Consumer Products posted similar surges. The BSE midcap and smallcap indices rose 0.8% and 1.1%, respectively.
According to ICICI Securities, the benchmarks reclaimed half the ground lost over the past six months as the cluster of support in the vicinity of 52 week’s EMA generated buying demand after the markets moved to an oversold trajectory. “Going ahead, we expect the index to resolve higher form base formation that was formed above 52 week’s EMA and gradually head towards 18,100 level in April 2022,” it wrote in a note.
India VIX ― the volatility index, cooled off to 20.61 level on Wednesday after witnessing above-31 levels in February end. “Historically, cooling off in VIX after a spike to above-30 levels signifies intermediate bottom is in place for equities that leads to a decent rally in the near term,” said ICICI Securities.
Wednesday also witnessed both foreign institutional investors and local investors buying equities after many months. While FPIs bought $178.82 million worth of shares, their local counterparts bought equities worth $160.19 million, provisional data on the exchanges showed. However, so far in FY22, FPIs have sold Indian shares worth $19 billion whereas DIIs have bought $29 billion. The aggressive selling by foreign investors have brought down their ownership to 18.5% at the end of February.
According to Kotak Institutional Equities, FPI investors perhaps do not find value in the markets and are selling aggressively, while retail investors find value and are buying aggressively. “We suspect return expectations of retail investors are shaped by returns of the past one-two years. It would be interesting to see the retail behaviour if the market was to stay flat for another six months, resulting in low returns for a 12-month period,” the domestic brokerage said on Wednesday.
Among the sectoral indices, realty, capital goods, banks, auto and IT indices gained the most, whereas metals slid the most.