Value hunters bring indices back in green; Sensex gains 497 points

A day after they registered their sharpest decline in three weeks, the Indian benchmark indices made a smart recovery on Tuesday on the back of value-buying, positive global cues, and positive news on the efficacy of vaccines against the Omicron variant of coronavirus. But the sell-off pressure continued and the indices could not hold on to the intraday surge and pared more than half of the gains from the day’s high.

The benchmark Sensex ended the session at 56,319, up 497 points or 0.9 per cent. The Nifty, on the other hand, ended the session at 16,770.85, a gain of 156.6 points or 0.9 per cent. Intraday, the two indices had touched a high of 56,900.74 and 16,936.35, respectively.

Analysts said there was a bit of value-buying after the recent correction. “There was buying at the bottom. But there is still nervousness as Omicron cases are rising. There is not much conviction in why the markets should go higher,’ said Andrew Holland, CEO, Avendus Capital Alternate Strategies.

Analysts cautioned that selling from the highs signalled that sentiment remained weak, and investors were eager to book profits at the earliest opportunity.

“Overall, selling pressure is intact at higher levels, and traders are using any recovery or bounce to sell in the market. Thus, for the near-to-short term, we maintain a cautious view and suggest traders continue with the ‘sell on rise’ strategy,” Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.

“While the market trend may be volatile in the near term on account of potential risk from the Omicron variant and fragile global cues, we suggest long-term investors take benefit of such volatility in the market and add to their portfolios gradually at lower levels,’ Khemka said.

News reports on the possibility of US President Joe Biden reviving his $2-trillion economic agenda brought some cheer. Market sentiment was dented after Democrat Senator Joe Manchin rejected Biden’s economic package. However, a call between the two has rekindled hopes about a potential reconciliation.

Pharma major Moderna’s statement that a booster dose of its Covid-19 vaccine appeared to protect against Omicron cheered investors. And China’s push to help troubled developers further boosted investors’ sentiment.

Investors in Indian equities are grappling with a bunch of concerns, including the rise in Omicron cases, the hawkish turn by central banks, and continued selling by foreign portfolio investors (FPIs). Analysts said updates on the new variant will keep the choppiness high in the equity markets going forward.

“We expect this trend to continue in the near future. Participants should limit leveraged positions until we see some stability,” said Ajit Mishra, VP-research, Religare Broking.

The market breadth was positive, with 2,239 stocks gaining against 1,095 stocks declining on the BSE. As many as 377 stocks were locked on the upper circuit, and 199 hit 52-week high. More than two-thirds of Sensex constituents rose.

HCL Technologies was the best performing Sensex stock and gained 3.9 per cent. Reliance Industries rose 1.44 per cent and contributed most to the Sensex gains. All the sectoral indices gained on BSE. Metal stocks gained the most, and its index gained 2.9 per cent.

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