Indices snap six-day losing streak on positive global cues

Benchmark indices rebounded on Friday, gaining a per cent and snapping a six day losing streak amid positive global cues.

The third quarter US GDP data came in at a two-year high of 4.9 per cent and showed strong resilience in the US economy. The European Central Bank left interest rates unchanged on Thursday for the first time in over a year. On the domestic front, heavyweights such as Maruti, Cipla and Dr. Reddy’s Laboratories posted robust results, which boosted investor sentiment.

All in green

The Sensex rose 634 points, or 1.01 per cent, to touch 63,789.80, while the Nifty 50 settled at 19,047, up 190 points. All sectors ended in the green with PSU Banks, Realty, Auto and IT being top gainers. The indices slid 2.5 per cent and 2.7 per cent, respectively, during the week.

Foreign portfolio investors pulled out ₹1,500 crore on Friday, even as domestic institutions bought ₹313 crore, provisional data showed. FPIs have sold shares worth $2.4 billion in October, in addition to the $1.8 billion sold the previous month.

The ongoing unrest in West Asia and concerns over the potential impacts of higher interest rates on future economic growth have resulted in a decline in investor confidence, said market watchers.

US to dictate direction

Joseph Thomas, Head of Research, Emkay Wealth Management, said: “The movements in the US market and the geopolitical developments will continue to hold sway over the markets in the coming days. The domestic economy is afforded some protection by the robust economic growth and the strong fundamentals. Another positive is the likelihood of domestic interest rates remaining stable for a longer time after the recent spike in money market yields.”

According to Vinod Nair, Head of Research at Geojit Financial Services, sectors such as FMCG, consumption, fertilizers, and core segments such as infrastructure and housing, are expected to present potential growth opportunities. Contributing factors include the mitigation of risks associated with raw material costs and a stable long-term demand outlook from external sectors, which may specifically support sectors like Chemicals and Pharma in the medium-term.

Most Asian markets ended in the green on Friday, led by Nikkei 225 (1.3 per cent) and Hang Seng (2.1 per cent). European stocks were trading in the red as weak corporate earnings offset news of robust US economic data released overnight. Energy stocks outperformed as oil prices surged on concerns over escalation of the Israel-Hamas conflict.

“In the short-term, market sentiment remains cautious, with investors closely monitoring developments in West Asia, upcoming corporate earnings, and key economic data, including domestic PMI figures; to be announced next week,” said Nair.

The US Fed’s rate decision on Wednesday and the BOJ’s meeting outcome on Monday will be key events to watch out for next week.

“The short-term trend of Nifty seems to have reversed on the upside and the sustainability of this upside bounce could be crucial to call this as an important bottom reversal. Nifty is likely to move up further towards the next overhead resistance of around 19230 levels. Any weakness from here could find support around 18,850 levels,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

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