Global cues, low crude oil prices lift indices; Sensex gains 659 points

The Nifty, on the other hand, ended the session at 17,798, with a gain of 174 points, or 0.9 per cent

Positive global cues, sharp fall in crude oil prices and strong overseas flows lifted the Indian markets on Thursday. The benchmark Sensex gained 659 points, or 1.1 per cent, to end the session at 59,688. The Nifty50, on the other hand, ended the session at 17,798, with a gain of 174 points, or 0.9 per cent. Banking stocks led the advance with the sector gauge rising close to 2 per cent. Foreign portfolio investors (FPIs) bought shares worth nearly Rs 3,000 crore.

In an earlier session, Brent crude prices had dropped to $88 a barrel, their lowest since January 24, 2022. The fall of crude prices, to levels last seen before the Russian invasion of Ukraine, is beneficial for India as it reduces the import bill and consumer price inflation.

Demand risks due to monetary tightening and the Covid-19 situation in China led to the drop in crude oil prices. China extended the weeklong lockdown in Chengdu as Covid-19 cases rose. Chengdu is the capital of Sichuan province and is the biggest city in China to be shut down after the two-month lockdown in Shanghai. Chengdu reported 116 cases on Wednesday.

An overnight rise on the Wall Street further, after a recent rout, boosted sentiments. However, the trading of US futures turned cautious as European Central Bank raised rates by 75 basis points to tackle soaring inflation.

 "The domestic financial market experienced a wave of optimism tracking strength across global markets as oil prices eased, cooling investor concerns about rising inflation. Despite premium valuations, consistent FPI inflows are aiding Indian bourses to stay resilient,” said Vinod Nair, head of research, Geojit Financial Services.

Central banks are grappling with the need to control inflation without triggering an economic contraction in the process. A bunch of Fed officials reiterated their determination to get inflation under control in separate statements. Federal Reserve vice chair Lael Brainard stressed the need to raise rates to restrictive levels. Brainard also cautioned that risks could become two-sided in future.

Loretta Mester, president of Fed Bank of Cleveland cautioned against declaring early vis-a-vis inflation.

The Beige Book report by the Fed said the US economic prospects were weak while price rises showed no signs of moderating.

Markets have been volatile since the beginning of the year due to monetary policy tightening, the Russia-Ukraine war, the resultant commodity price disruptions and the slowdown in China.

However, the domestic markets have been resilient to the global turmoil. This, in part, is on the back of robust FPI flows into domestic stocks over the past one month. Technical analysts believe there could be more legs to the market rally.

"The Nifty50 has again reached the upper band of the prevailing consolidation range of 17,300-17,800. A decisive breakout would fuel the next leg of the up move towards the 18,100 zone. The rotational buying across sectors, combined with steady foreign flows has strengthened the possibility of a breakout," said Ajit Mishra, VP, research, Religare Broking.

The market breadth was strong with 2,042 stocks advancing and 1,437 declining. Four-fifths of the Sensex constituents rose. ICICI Bank rose 2.6 per cent and contributed the most to index gains followed by Axis Bank which rose 3.2 per cent.