Markets gain as FPI selloff eases; Sensex and Nifty end 0.6% higher

After declining 494 points, or 0.6 per cent, in opening trade, the Sensex ended the session at 80,248, gaining 445 points, or 0.6 per cent

Benchmark indices recovered from early losses to end with gains of 0.6 per cent on Monday. Sharp deceleration in selling by foreign portfolio investors (FPIs) and gains in cyclical stocks supported the up move as investors chose to look past a weak GDP (gross domestic product) reading for the September quarter (Q2FY25).

 

After declining 494 points, or 0.6 per cent, in the opening trade, the Sensex managed to end the session at 80,248, with a gain of 445 points, or 0.6 per cent. The Nifty 50 index closed at 24,276, rising 145 points, or 0.6 per cent. The gains were broad-based, with almost all sectoral indices ending in the green.

 

 

The GDP data for Q2 released last week showed the Indian economy grew at the slowest pace in seven quarters. The GDP grew by 5.4 per cent in July-September year-on-year (Y-o-Y). It grew by 6.7 per cent in the previous quarter.

 

"Despite a slump in the Q2 growth rate, the market maintained a positive bias as the core sector output in October shows signs of recovery. Slowing earnings growth is already factored in, and mid and smallcaps are rebounding. However, investors stay marginally cautious ahead of the Reserve Bank of India (RBI) policy this week due to the risk of a cut in GDP forecast. The current inflation dynamics are not favourable for a rate cut in the short-term, and the RBI is likely to turn more realistic on its growth projection for FY25,” said Vinod Nair, head of research of Geojit Financial Services.

 

Even after the gains on Monday, the Sensex is still 6.7 per cent below its record high hit on September 27. Meanwhile, the Nifty is still down 7.6 per cent, and the Nifty Midcap 100 and Nifty Smallcap 100 are down 6.4 per cent and 4.1 per cent, respectively, from their record highs.

 

FPIs sold shares worth Rs 238 crore while domestic institutions bought stocks of Rs 3,589 crore, according to data provided by stock exchanges.

 

FPI selling was muted even as the rupee hit fresh lows. The US dollar strengthened after President-elect Donald Trump warned BRICS nations against creating a new currency as an alternative to the dollar.

 

The dollar index rose by 0.5 per cent and was at 106.2. Oil prices rose as the Chinese economy showed signs of a slow recovery. China's manufacturing activity increased for the second straight month in October and rose to the highest since June. Brent Crude rose by 1.2 per cent and was trading at $73.12. 

 

Investors are eyeing the RBI monetary policy decision due on Friday. Also, the macro data from China and the US, and statements of central bankers in the US and Europe are expected to have a bearing on the market trajectory.

 

"A decisive break above 24,350 for the Nifty could pave the way for levels beyond 24,700. While contributions are coming from various sectors, IT and banking will likely remain key drivers, warranting close monitoring. A selective approach focusing on fundamentally strong stocks is recommended for broader indices,” said Ajit Mishra, senior vice president of Religare Broking.

 

Reliance Industries, which gained 1.3 per cent, contributed the most to Sensex gains, followed by Infosys, which rose 1.1 per cent. The overall market capitalisation of BSE-listed firms rose by Rs 3 trillion to Rs 450 trillion. Over 2,500 stocks advanced, while 1,550 declined on the BSE.