Sensex, Nifty50 end 2% higher on global cues

• Sensex ended 1,226 points higher at 58,065 while the Nifty50 ended up 386 points at 17,274 on Tuesday.
• This comes as the US indices – Nasdaq Composite and Dow Jones Industrial Average each ended 2.27% higher on Monday.
• Banking, IT and metal indices were top gainers in the Indian market.

India’s benchmark indices Sensex and Nifty50 ended with over 2% gains each on Tuesday taking cues from the global markets.

The Sensex ended 1,226 points higher at 58,065 while the Nifty50 ended up 386 points at 17,274.

“Markets recovered strongly after Monday’s slide and gained over 2%, tracking firm global cues. The Nifty index opened gap up and gradually inched higher as the session progressed and finally settled around the day’s high to close at 17,274.30 levels. All sectoral indices participated in the move, wherein metal, banking and IT were among the top gainers. The broader indices too witnessed decent traction and gained in the range of 1.7-2.5%,” said Ajit Mishra, VP - research at Religare Broking.

This comes as the US indices – Nasdaq Composite and the Dow Jones Industrial Average each ended 2.27% higher on Monday. Reports say that the rise was because of weaker-than-expected manufacturing growth in the US as its manufacturing index dropped 1.9 points to 50.9% in September as compared to August. Weak growth could result in the Fed slowing its aggressive rate hikes.

“On the backdrop of strong global cues, the benchmark indices bounce back sharply,” said Shrikant Chouhan, head of equity research (retail) at Kotak Securities. “Among Sectors, all the major sectoral indices were traded in the green but metal and private bank indices outperformed, both indices rallied over 3%.”

Indian indices have lost more than 2% in the last one month on worries about aggressive monetary policy outcomes amid high inflation.

Banking, IT and metal indices were top gainers in the market. Banking stocks rallied as SBI, HDFC Bank, ICICI Bank, Yes Bank and Bank of India have increased their lending rates after RBI’s 50-basis-point rate hike. This means the cost of borrowing rises and customers tend to pay more on EMIs as interest burden goes up.

IndusInd Bank was the top performer in the Nifty50 with 5% gains as analysts expect the bank to continue with strong loan growth.

“IndusInd Bank continues to report a strong pick up in loan growth and we expect these trends to remain healthy, which is likely to support margins. Deposit franchise too is growing strongly, with sustained focus on ramping up retail deposits. Improvements in asset quality, particularly in the MFI/Restructuring book, and commercial vehicle (CV) demand outlook will be a key monitorable,” said a report by Motilal Oswal.
In the first three days of October, FIIs sold assets worth ₹3,263 crore including equity, debt and hybrid, which is a strong headwind for the market.

Along with it, the weak rupee hovering around 81.50 is another pain point for the Indian market.

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