Benchmark indices snapped out of their three-day losing streak on Friday, as investors reacted positively to the central bank’s continued efforts to support growth and its commitment to manage inflation. Consistent inflows into equity funds also cheered investor sentiments. The market shrugged off concerns over the central bank’s lower GDP growth forecast for FY23.
While the Sensex surged 412.23 point or 0.70% to settle at 59,447.18, the broader Nifty50 added 144.80 points or 0.82% to end the session at 17,784.35. Reliance Industries — the largest company by market capitalisation — boosted gains in both the benchmarks with about 2% rise. With Friday’s gains, the Sensex has surged nearly 13% over the last one month with RIL, HDFC twins and ICICI Bank contributing 46.3% to the index’s gains.
Further, the market’s fear gauge, India VIX, cooled down by 7% to below-18 level, indicating stability in the market. Both foreign and domestic institutional investors sold shares on Friday. While FPIs sold $75.8 million worth of shares, local investors sold equites to the tune of $ 2.2 million, provisional data from exchanges showed.
“Nifty bulls regrouped at lower levels as sentiments were primarily buoyed by a dovish RBI. Also helping sentiments were reports that equity mutual funds have attracted a net sum of Rs 28,463 crore in March, making it the 13th consecutive monthly net inflow, despite a volatile stock market environment and amidst continued FPIs selling,” said Prashanth Tapse, vice president (research) at Mehta Equities. According to Tapse, the next goalpost for Nifty50 is seen at the 18,000-mark and then all eyes will be at its all-time-high of 18,605 points.
However, the yield on 10-year benchmark bonds spiked 21 basis points (bps) as the RBI restored the liquidity adjustment facility (LAF) corridor to 50 bps, the position that prevailed before the pandemic. The yield closed at 7.12% on Friday, its highest level since May 30, 2019.
“Domestic markets welcomed RBI’s move to maintain accommodative stance in its policy meet on Friday. While RBI kept the benchmark interest rate unchanged at 4%, it lowered the FY23 growth forecast to 7.2% vs 7.8% earlier and raised Inflation estimate to 5.7% vs 4.5%,” said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services.
Sector-wise, barring Nifty IT, all other sectors ended positive on Friday. The broader markets also continued to outperform the frontline indices, as both BSE mid-cap and small-cap indices surged almost 1% each.
“The fact that the broader markets are rallying recently is mainly a catch-up play after the sharp correction that came in the space over the last five-six months. Further, valuations in the mid-cap space are now relatively attractive compared with large caps,” Aishvarya Dadheech, fund manager, Ambit Asset Management, told FE on Friday.
Overall, out of the 3,509 stocks traded on the BSE, 2,245 advanced, whereas 1,143 closed lower. The remaining 121 stocks closed at the same level as the previous day.
