Stocks up more than 1% on global cues

Market gains were led by Bharti Airtel, Tech Mahindra, IndusInd Bank, HCL Technologies and Tata Consultancy Services, which rallied between 2.94% and 3.38%.

Tech stocks gained the most ahead of the company’s earnings release, as a favorable US economy fueled optimism about the sector. Barring consumer durables, all other sectoral indices witnessed smart gains with metals, state-run banks, energy stocks and auto top gainers.

Shrikant Chauhan, head of equity research (retail), Kotak Securities Ltd. said, “A positive undercurrent in global markets weighed on local equities as investors resorted to short-covering following last week’s correction, which pushed key benchmark indices lower.” got help. retrieve their psychological levels”.

Chouhan said with China continuing to lift Covid restrictions, there are expectations that demand could pick up, giving breathing space to markets grappling with fears of a recession and higher interest rates. However, the market may remain volatile as many concerns are yet to subside.

Analysts said investors would closely watch inflation data to be released in the US, Europe and India this week. Furthermore, Fed Chair Jerome Powell’s speech on Tuesday could be important for global markets as it could shed some light on future action. Siddharth Khemka, head of retail research at Motilal Oswal Financial Services Ltd, said some momentum could be seen in sectors such as banking, auto and metals.

Traders speculated that an unexpected contraction in US services activity and a slowdown in wage growth would reduce the Federal Reserve’s rate hike aggression.

Friday’s US economic data is key for global markets, said VK Vijayakumar, chief investment strategist at Geojit Financial Services. “All data points to a strong but cooling US economy, which indicates an increasing likelihood of a soft landing for the US economy. However, in India, the major drag has been the continued FII selling. This is data worth watching. If this also reverses, Nifty may break higher.

The dollar index fell below 104 as traders expected a less hawkish US Fed, and the US 10-year bond yield eased. All signs are bullish, analysts said.

Anindya Banerjee, vice-president, currency derivatives and interest rate derivatives, Kotak Securities Ltd, said the rupee gained 36 paise to close at 82.36 against the US dollar due to weakness in the dollar index and strength in emerging market currencies. Run banks will not allow the pair to fall further, Banerjee said, however, in the near term, he expects the downside bias to continue due to risk-on sentiment.

Risk-on trade reflected a 2.5% decline in the fear gauge India Vix at 14.65.

Market players remain bullish on India’s growth story and expect continued inflows by domestic institutions and revival of foreign portfolio flows.

Sunil Damania, Chief Investment Officer, MarketsMojo.com, expects a recovery in FII inflows, which started in the second half of last year. “We expect IT to outperform financial services, given the benefits of price drop and weak local entity with customers,” Damania said.

“Given that India is set to grow three times as fast as global GDP this year, both domestic and foreign institutional flows are likely to remain strong throughout the year,” said Saurabh Mukherjee, founder and chief investment officer, Marcellus Investment Managers. In the best shape I’ve seen in the last 14 years I’ve lived in this country.”

Another positive for the markets is the expected strength in metals in the near term with the reopening of China.

“Metals could be a very short-term strategic play,” said Jyotivardhan Jaipuria, managing director, Valentis Advisors, who expects Indian indices to underperform EM and global market peers in the near term.