Markets rally on improving investor sentiment, up 1%

The BSE Sensex closed at 59,005.27, up 514.34 points or 0.88%. The Nifty too closed 165.10 points or 0.95% higher at 17,562.

Deepak Jasani, Head of Retail Research, HDFC Securities said, “Nifty ended higher on the back of a late bounce as global markets seemed to be recovering from contagion fears based on troubles in Evergrande. After a sell-off in the morning session, global indices corrected as traders reevaluated risks from China’s action on the real estate sector and await this week’s Federal Reserve meeting. A correction in oil prices from the previous day’s heavy selling, as investors became more confident that the crisis would limit the transition from debt-ridden Chinese developer Evergrande, also helped sentiments. “

Shares in Asia-Pacific were mixed as the Nikkei in Japan was down 2.17% while Hong Kong’s Hang Seng index rose 0.5%. Markets in mainland China and South Korea remained closed on Tuesday for a holiday.

In an effort to revive battered trust in the firm, Evergrande President Hui Ka Yuan said in a letter to employees that the company was confident it would “come out of its darkest moment” and delivered the asset projects as promised. Will do The president of the debt-ridden property developer also said that Evergrande will fulfill responsibilities to property buyers, investors, partners and financial institutions.

According to Vinod Nair, Head of Research, Geojit Financial Services, domestic indices declined during the opening trading session, although a positive trend in global markets encouraged Indian equities to rebound during the second half.

“Global stocks recovered from fears triggered by troubles in the Chinese economy, ahead of the FOMC meeting that begins later in the day. All major sectors traded in the green zone, while the auto sector remained under pressure due to rising input costs and semiconductor shortages faced by the global auto industry.”

US Federal Reserve policymakers began a two-day meeting on Tuesday to discuss the outlook for US jobs and inflation and formulate a policy response that could bring the central bank closer to dialing up its support for the economy.

Foreign liquidity inflows, which have been supporting Indian equities in a bull run, could be affected if the US Federal Reserve takes an early decision on interest rates.

Foreign institutional investors (FIIs) have infused $790.57 million in September so far, while this year has infused $7.94 billion in equities. However, domestic institutional investors are on the back foot. They were net sellers of shares of value ₹237.57 crore in this month but net investors ₹22126.18 crore so far in 2021.

Goldman Sachs said, “While Indian equities have performed well this year, being the regionally best performing market, we continue to weigh heavily on expectations of a strong cyclical recovery and ancillary inflows.” Goldman Sachs estimates that India’s market capitalization is currently growing at $3.5 trillion. Over $5 trillion by 2024, making it the fifth largest market by capitalisation. India’s share in global market capitalization and index weighting should also increase.

(Reuters contributed to the story)