Indices extend gains on strong global cues; markets eye RBI's policy

The Indian markets gained on Wednesday, along with global peers, after peace moves on the Ukraine crisis and the Bank of France governor's statement about the European monetary policy boosted investor confidence and triggered a rebound in technology shares.

Back home, a jump in automobile and financial stocks, too, helped lift the markets.

The benchmark Sensex ended Wednesday's session at 58,466, up 1.1 per cent or 657 points. The Nifty50, on the other hand, ended the session at 17,464, following a gain of 197 points or 1.1 per cent. But the broader market continued to underperform with the Nifty Smallcap 100 index gaining only 0.4 per cent. The overall market breadth was mixed with almost an equal number of gainers and losers on the BSE.

Foreign investors sold shares worth nearly Rs 900 crore, even as domestic institutions pumped in Rs 1,800 crore.

European stocks rose and technology shares bounced back as a bunch of positive earnings reports lifted sentiment. Investors continued to weigh corporate earnings against the withdrawal of pandemic stimulus and rate hikes.

Bank of France Governor Francois Villeroy de Galhau's statement that the markets might have overreacted regarding pricing rate hikes came as a relief to investors. While interacting with lawmakers, Villeroy said the ECB has the option on the pace at which it moves to normalise its monetary policy.

Reports of progress regarding the de-escalation of the Ukraine crisis further cheered the markets. On Tuesday, Emmanuel Macron, president of France, said that he had obtained assurances from Russia's Vladimir Putin that there would be no "deterioration or escalation" of the crisis over Ukraine.

Investors were also keenly eyeing the US inflation data which was due on Thursday.

"The earnings season has gathered pace with revenue largely in line with estimates. But higher commodity prices are taking a toll on margin and profitability. In the past, we had observed that market volatility persisted until the announcement of the first rate hike by the Fed. After that the markets settled down and flows in equities resumed," said Mitul Shah, head of research, Reliance Securities.

Market players said investors were keenly eyeing the RBI's policy announcement. With major global central banks turning hawkish, it remains to be seen the approach RBI will take, they said.

"All eyes are on the outcome of the monetary policy review meeting on Thursday. We expect the committee to maintain the status quo on rates but may change their stance to neutral. Besides, the RBI's commentary on growth and inflation will be crucial," said Ajit Mishra, VP-research, Religare Broking.

As many as 295 stocks were locked on the lower circuit against 230 that hit the upper circuit. All the BSE sectoral indices gained with the exception of the oil & gas index.

Auto and consumer durable stocks gained the most, and their indices rose 2.2 and 1.8 per cent, respectively. All the Sensex stocks, except three, rose. HDFC Bank rose 2.5 per cent and contributed the most to index gains. Reliance Industries rose 1.2 per cent. Maruti Suzuki jumped 4.1 per cent —the most among Sensex components.