After falling more than 11 percent to a four-month low in December, the stock market seems to have recovered sharply across sectors, helping the benchmark indices and the broader markets rise more than 7 percent.
Renewed buying interest by foreign institutional investors since the beginning of the January series after selling more than Rs 1 lakh crore worth of shares in last quarter of 2021, the absence of disruption in economic activity during the ongoing spread of the Omicron variant of the coronavirus, hopes of strong earnings growth in the December quarter, a rise in bank credit, and gains in the global markets are some of key reasons boosting market sentiment.
The Nifty 50 rallied to almost 17,900 on January 5 from 16,614 on December 20, while the BSE Sensex reclaimed the 60,000 mark. Both the indices rallied more than 7.5 percent during this period, while the Nifty Midcap 100 index gained more than 7 percent and the Smallcap 100 index jumped over 10 percent.
“The Dow setting a new all-time new high when the number of daily Omicron cases crossed 1 million in the US might appear as a paradox, but this is a clear message from the market that the fast-spreading, less virulent variant of the virus marks the beginning of the end of the pandemic,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services. “Also, most countries are not imposing fresh restrictions impacting economic activity.”
He said FIIs are back as buyers, having bought for three days consecutively, which will be fodder for the bulls.
“More importantly, news on bank credit growth is promising. So, bulls tightening their grip on banking stocks and bears running for cover may lead to a smart rebound in leading banks, particularly private sector banks in which FIIs were large sellers,” Vijayakumar said.
A total of 117 stocks in the Nifty 500 index outperformed the benchmark indices, registering double-digit gains since the December 20 closing. Two stocks – Responsive Industries and Suzlon Energy – surged 64 percent and 44 percent, respectively.
Among others, Balrampur Chini Mills, KPIT Technologies, IDFC, Balaji Amines, Tube Investments of India, Minda Corporation, Affle India, eClerx Services, Vardhman Textiles, Graphite India, Varroc Engineering, GMR Infrastructure, Rain Industries, KPR Mill, Welspun Corp, Jindal Stainless (Hisar), Alkyl Amines Chemicals, Gujarat Fluorochemicals, and Firstsource Solutions gained 20-38 percent in the past 12 trading sessions.
The Nifty 50 index itself gained more than 7 percent in the same period. The Nifty Auto, Bank, Financial Services, Infra and Realty indices also gained about 7 percent each, while the Metal and Pharma indices rallied about 6.5 percent each. The IT index was the biggest gainer among all sectors, rising almost 10 percent given the expected growth in quarterly earnings, especially after a strong outlook by Accenture.
More than 460 stocks in the Nifty 500 turned positive in the period of 12 sessions, indicating a broad-based rally.
RBL Bank was the biggest loser in this period after the Reserve Bank of India appointed Yogesh Dayal, its chief general manager, as an additional director on the board of the bank, and MD and CEO Vishwavir Ahuja, a veteran banker, went on leave.
Future Retail, APL Apollo Tubes, Dilip Buildcon, MAS Financial Services, Future Consumer, INOX Leisure, Tasty Bite Eatables, and Hatsun Agro Products were down 4-10 percent.
FIIs have bought a net Rs 2,750 crore of shares in the three previous consecutive sessions, or since the start of January series, against more than Rs 1 lakh crore of net selling in the fourth quarter of CY21.
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