 "Indices rise most in 2 months on strong economic data; Sensex up 556 points")
The benchmark indices logged their biggest single-day gains in over two months, buoyed by India’s encouraging economic data. Favourable global cues, following China’s fresh stimulus measures to revive its economy, also boosted risk appetite.
The Sensex closed at 65,387 following a gain of 556 points or 0.8 per cent; the Nifty50 finished at 19,435, up 181 points or 0.9 per cent -- most since June 30. Friday’s gains also helped both indices snap their five-week losing streak.
India’s economy grew at its fastest pace in four quarters -- at 7.8 per cent -- in the April-June quarter of financial year 2023-24 (FY24). India's manufacturing sector activity continued to expand in August. The S&P Global Purchasing Managers’ Index (PMI) rose to a three-month high of 58.6 in August. August was the 26th month in a row when the PMI was above 50. A measure above 50 separates expansion from contraction.
Analysts said the robust momentum in domestic demand conditions continues to reflect in the GDP numbers. “We expect the resilience to be sustained, bolstered by the confluence of favourable structural and cyclical drivers. Stronger balance sheets across economic agents and the government's pro-active supply-side response ushering in structural reforms are likely to provide a secure foundation to a strong multi-year growth cycle,” said Upasana Chachra, chief India economist, Morgan Stanley
Shibani Sircar Kurian, senior EVP & head-equity research, Kotak Mahindra Asset Management Company, said the equity markets have been buoyant because of strong macro environment, and robust earnings and flows.
“India’s macro fundamentals appear resilient with a steady growth profile, core inflation primarily in check and a comfortable external sector balance,” she said.
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Most Asian markets closed with gains after the People's Bank of China said it will trim the amount of foreign currency deposits required to hold as reserves. The Chinese central bank's announcement comes after its authorities announced a fresh stimulus to revive its property sector and expanded tax breaks for child and parental care and education.
The Chinese authorities have avoided big bang economic reforms amid concerns about rising debt. Analysts said the move by Chinese authorities exceeded market expectations, but it needs to see how much it aids economic recovery.
Foreign portfolio investors (FPIs) bought shares worth Rs 488 crore on Friday, while domestic institutions pumped in nearly Rs 2,300 crore.
The market breadth was positive, with 2,124 stocks advancing and 1,554 declining. More than four-fifths of Sensex stocks advanced. ICICI Bank, which rose 1.13 per cent, contributed the most to Sensex gains, followed by NTPC, which rose 4.8 per cent. The BSE mid and smallcap indices hit an all-time high on a closing basis. So did the BSE PSU index.
“PSU banks saw fresh buying after rating agency Fitch affirmed ratings on India’s PSU Banks. Overall, we expect the market to trade in a range with sector- and stock-specific actions as the broader market momentum remains positive,” said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.
Most Adani group shares rise
Eight out of 10 Adani group stocks ended with gains a day after they shed nearly Rs 36,000 crore in market capitalisation (mcap) amid fresh allegations made by the Organized Crime and Corruption Reporting Project (OCCRP). On Friday, the group added over Rs 13,500 crore in mcap, taking the total mcap to Rs 10.6 trillion. Stocks in the energy space gained the most — Adani Power and Adani Green added over 2 per cent each, while Adani Energy Solutions added 1.6 per cent.
Experts said that the rebound in the group stocks indicates that investors may not be too perturbed by the latest allegations but instead are focused on the company’s deleveraging efforts and ability to improve its operating performance.