Following a sharp selloff over the last two days, equity markets were in a tight grip of volatility on Monday with benchmark indices managing to eke out nominal gains by close. The BSE Sensex oscillated 945 points between gains and losses during the day. It touched an intra-day low of 58,699 to eventually recover and close 170 points higher at 59,500. The NSE Nifty also rose 243 points from its day’s low to end at 17,649, up 45 points.
The top stocks that helped the indices edge higher included Adani Enterprises, Bajaj twins, Ultratech Cement, HCL Tech, NTPC, Asian Paints, Infosys, Wipro, Maruti and Reliance, which gained 1-5 per cent.
On the flip side, Power Grid, L&T, IndusInd Bank, Bajaj Auto, HUL, Tata Steel and JSW Steel were the leading frontline losers that dropped up to 3 per cent.
Meanwhile, broader markets trailed gains in benchmark indices. The BSE Midcap and Smallcap indices closed up to 0.2 per cent lower. Among sectors, Nifty IT gained the most by 1 per cent followed by PSB index, while oil & gas pocket was the top loser, down over 3 per cent.
Foreign institutional investors sold 83.72 billion rupees ($1.03 billion) worth of shares over the last two sessions since Hindenburg’s scathing report on the financials of Adani companies.
The rise in domestic equities is also aided by macro data from the U.S., which signalled a slide in inflation and raised hopes of a moderation in the pace of the Fed’s rate hike at its policy meeting scheduled later this week.
Besides the Fed’s policy meeting, investors await rate decisions from other global central banks such as the European Central Bank and the Bank of England, later this week.
Investors will also shift focus to India’s Union budget on Feb. 1, with the government’s fiscal consolidation path and borrowing calendar for fiscal 2024 as triggers.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “Today the market will be completely dominated by the movements in Adani stocks. The statement from Adani Enterprises that the FPO is on schedule and that there is no change in the price band is hugely important. This can be interpreted as a reflection of the confidence of the management in the success of the FPO. It is important to understand that the stock has limited public float. So, the price crash on Friday happened mainly due to shorting Adani stocks in general and Adani Enterprises in particular. One possibility is a big short-squeeze in the stock. Huge volatility is in store in Adani stocks today. The sustained selling by FPIs in January with a massive sell figure of Rs 5978 crores last Friday is a bit intriguing. Did the FPIs get wind of the storm blowing now? It is important to note that during the last 3 days while Nifty declined by 3.2 %, Bank Nifty declined by 6.3% on concerns of the Adani crisis impacting the banks. The correction in high quality private sector banks is a buying opportunity. Investors may wait for the dust to settle.”
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