Indian stock markets, witnessed a significant rebound on Tuesday following the sharp decline on Monday. This resurgence can be attributed to robust performances within the automotive sector and growing expectations of the US Federal Reserve maintaining its current policy rates in the foreseeable future. Additionally, India's retail inflation dipped to a three-month low in September, boding well for increased demand during the upcoming festive season.
The Sensex exhibited a remarkable surge of 298.12 points, reaching 65,810.51 points in early trading, while the Nifty experienced an uplift of 88.30 points, landing at 19,600.65 points.
The top gainers of the day were Tata Motors, Bharti Airtel, and M&M, while TCS, Asian Paints, and IndusInd Bank faced the brunt of market pressure.
Tuesday's rally was largely driven by the automotive sector, which saw notable gains.
To recap Monday's market performance, the Sensex witnessed a steep decline of nearly 500 points as investors shed their holdings in financial, banking, and energy stocks. This sell-off was fueled by escalating tensions in the Middle East and surging global crude oil prices.
Amidst the uncertainty stemming from the Israel-Hamas conflict, investors adopted a cautious stance, refraining from taking significant risks, according to market analysts.
The 30-share BSE Sensex dropped by 483.24 points, representing a 0.73% decrease, settling at 65,512.39. Simultaneously, the Nifty declined by 141.15 points or 0.72%, ending at 19,512.35.
On Monday, only three Sensex stocks managed to close in the green, while 43 scrips on the Nifty-50 ended the day in the red.
Equities experienced a resurgence on Tuesday following remarks from prominent Federal Reserve officials, suggesting that the recent surge in US Treasury yields could serve as a substitute for further interest rate hikes.
This positive momentum came as oil prices retraced their previous day's substantial gains, driven by concerns over supply disruptions following a weekend attack by Hamas on Israel. Traders are cautiously optimistic that this crisis will not spread to the broader, oil-rich Middle East region.
Despite mounting geopolitical tensions, traders started the week on a positive note, buoyed by Friday's impressive US jobs report, which also indicated a slowdown in wage growth—a "Goldilocks" scenario where the data neither appeared too weak nor too strong.
The upbeat sentiment received an additional boost on Monday after Fed Vice Chair Philip Jefferson acknowledged that the recent surge in US Treasury yields to multi-year highs could provide the necessary restraint on credit typically achieved through higher interest rates.
He stated, "Looking ahead, I will remain aware of the tightening in financial conditions through higher bond yields and will keep that in mind as I assess the future path of policy" during a National Association for Business Economics conference in Dallas.
While the US economy remains robust, concerns had been mounting that further tightening could potentially push it into recession next year.
We anticipate the release of minutes from the Fed's September policy meeting on Wednesday, along with inflation figures.
Across Asia, markets showed strong gains, with Hong Kong and Tokyo surging more than 2%, while Sydney, Seoul, and Singapore also witnessed gains exceeding 1%. Shanghai, Wellington, Manila, and Jakarta also reported positive market performance.
There are concerns that allegations of Tehran's involvement in helping Hamas plan recent attacks could lead to potential military action against Iran by Israel, a major crude oil producer. Such an escalation could drive prices even higher, although Iran has denied these claims.
Global Market Highlights:
Tokyo – Nikkei 225: Up 2.5%
Hong Kong – Hang Seng Index: Up 2.2%
Shanghai – Composite: Up 0.2%
Brent Crude: Down 0.1% at $88.07 per barrel
Dow Jones: Up 0.6%
FTSE 100: Flat
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