Stock jumps 2%, after best one-day gain in five weeks

Benchmark indices Sensex and Nifty closed at 58,065.47 and 17,274.30, up 2.25% and 2.29%, respectively, on Tuesday.

It was the market’s best day in five weeks, marking the sharpest gain since a 2.7% gain on August 30.

While aggressive monetary tightening by most of the world’s major central banks weighed on stocks amid rising recession fears and increased risk-off sentiment, investors now expect the US Federal Reserve to aggressively back down from tighter monetary policy. can be forced.

Analysts said the unexpected slowdown in the US manufacturing PMI led to speculation that the US Federal Reserve would slow down the pace of policy tightening. The manufacturing PMI fell from 52.8 in August to 50.9, the lowest reading since May 2020. The Dow Jones Industrial Average had its biggest one-day gain in more than three months on Monday, while other indices followed suit.

Deepak Jasani, Head of Retail Research at HDFC Securities, said Asian and European stocks rose overnight on Wall Street after Wall Street expected weak US economic data to change global central bank policy actions. The Reserve Bank of Australia raised its benchmark interest rate by 25 basis points, compared with an expected 50 basis increase. In addition, Britain’s decision to drop part of a controversial tax-cutting scheme and little hope for aggressive central bank action returned some confidence to investors, Jasani said.

With concerns over tightening monetary policy eased, US bond yields also eased, and so did the dollar index. After falling sharply at 81.87 on Monday, the rupee on Tuesday closed at 81.52 against the dollar, closing at an all-time low.

Anindya Banerjee, vice-president, currency and interest rate derivatives, Kotak Securities Ltd, said the rupee gained 35 paise due to fall in the dollar index and fall in US yields. The rally in stocks also helped. In the near future, US economic data such as ISM services and US NFP reports will provide direction. We expect a range of 81.20 and 82.00 in the spot market.”

were net buyers of foreign portfolio investors Equity of Rs 1,344.63 crore as on Tuesday. FPIs, who became net sellers of equities since September 14, have become net buyers from Monday. In the near term, FPIs have turned positive with dollar and US bond yields declining, analysts said.

The domestic market was also helped by the upbeat domestic business data released by banks.

S Ranganathan, Head of Research, LKP Securities, said positive global cues and encouraging quarterly updates on advances and collections from banks during Q2 led to gains in the indices.

Meanwhile, investors await the September quarter earnings report for indications starting next week.

Ranganathan said the market is optimistic regarding the retail demand across segments during the festive season and the financials ahead today.

All sectors ended the day with gains, and even laggards such as the IT sector participated in the rally.

Siddharth Khemka, Head of Retail Research, Motilal Oswal Financial Services Ltd said, “Indian markets are showing strength after Nifty neared the low of 16,800 last week. US markets appear to be consolidating after falling to their 52-week low. Khemka said pre-quarter updates from banks and financial companies indicate solid quarterly earnings.