In the last 3-4 working days, signs of US recession were observed in the international markets. Its effect was visible in the Indian stock market. The numbers that came out on Friday had shaken the investors in the country. Fall of more than 1000 points and loss of market capitalization of more than Rs 5 lakh crore. This was not an ordinary incident. The main reason for this fall was the signs of recession in the US economy.
On the first trading day of the week, the stock market opened at the green mark leaving behind three consecutive days of declines and a rise of about 470 points was seen. Though this rally did not yield even a one percent return, it definitely raised the question in the minds of investors and analysts whether the Indian market has digested the signs of the US recession. Will we see a bull run on India’s Dalal Street in the coming days? Will Indian investors ignore the US economy and continue to invest in the stock market? Will foreign investors be able to maintain confidence in an overvalued market like India?
All these questions are certainly difficult, but it is very important to find their answers because the Federal Reserve has to meet at least twice before and during the US presidential elections. The impact of the Fed’s decisions can be clearly visible on the Indian market and investors. Let us try to understand from the stock market data what kind of movement has been observed in Sensex and Nifty.
Sensex and Nifty rise
Despite concerns over the US economy following last week’s jobs data, major Indian stock indices Sensex and Nifty 50 closed higher on Monday led by gains in banking and consumer stocks. The US data indicated a continuing downturn in the labour market. The BSE benchmark Sensex closed 375 points or 0.46 per cent higher at 81,559 while the Sensex had touched 81,653.36 points during the trading session. However, the Sensex opened slightly lower at 80,973.75 points. On the other hand, the main National Stock Exchange index Nifty rose 93 points or 0.34 per cent and closed at 24,936. During the trading session, Nifty touched the day’s high of close to 25,000 points i.e. 24,957.50 points. By the way, Nifty opened with numbers.
Shares of these companies rise
On Sensex, HUL, ICICI Bank, ITC, Kotak Bank, IndusInd Bank, Axis Bank, HDFC Bank and Nestle India were the top gainers with gains of 0.5 per cent to 3 per cent. On the contrary, Tech Mahindra, Tata Steel, NTPC, Tata Motors and Power Grid closed in the red. Budget carrier SpiceJet closed with gains of over 4 per cent after it struck a deal with Carlyle Aviation Management to restructure aircraft leases worth around $137.6 million. Energy solutions provider Deep Industries closed with an upper circuit of 20 per cent after an order worth Rs 1,402 crore from Oil and Natural Gas Corporation (ONGC).
On the sectoral front, Nifty FMCG rose over 2% led by Godrej Consumer Products, Dabur and UBL, while Nifty Bank rose over 1%. Meanwhile, the more domestic-focused small-cap and mid-cap indices declined 0.93% and 0.26% respectively. Meanwhile, the market capitalisation of all BSE-listed companies rose by Rs 11,913 crore to Rs 460.3 crore. The market scope tilted in favour of the bears. About 2,388 stocks rose, 1,651 stocks fell and there was no change in 142 BSE stocks.
What do you say after knowing this?
Vinod Nair, head of research at Geojit Financial Services, said in a press release that despite a negative start amid weak global cues, the domestic market showed some recovery from last week’s sharp decline. Currently, the market is trying to achieve stability amid fears of possible rate cuts and a recession in the US. Current trends in US employment data suggest that a possible 25 basis point rate cut by the Federal Reserve may not be enough. This means that if interest rates are reduced by more than 0.25 percent, a good upside can be seen in the stock market.
