Sensex and Nifty rebound sharply as investors return to equities after an eight-week losing streak. (Img: Pinterest)
Mumbai: Indian equity benchmarks staged a strong recovery in morning trade on Monday, October 5, after suffering eight consecutive weeks of losses. The Sensex climbed more than 500 points, while the Nifty 50 moved higher by around 0.8%, as easing crude prices, improved global sentiment and gains in banking and technology stocks lifted investor confidence.
The rebound comes after one of the longest sustained losing runs for the benchmark indices in decades. Market participants are now watching whether Monday's gains mark the beginning of a broader recovery or remain a short-term technical bounce.
One of the immediate factors supporting the recovery is short covering following the sharp correction witnessed over the past several weeks. The Sensex and Nifty had extended their declines for an eighth consecutive week through October 1, their longest such losing streak in 25 years.
With valuations having corrected significantly, some traders appear to be closing bearish positions, providing additional buying support. Improving sentiment around diplomatic efforts linked to the US-Iran conflict has also helped reduce some of the immediate pressure on global markets.
A moderation in international crude prices has provided another positive trigger for Indian equities. Brent crude slipped towards the $101-a-barrel level in early trade amid increased supply from the Middle East and moves by G7 countries to release oil stocks.
Lower crude prices are particularly important for India because the country relies heavily on imports to meet its energy requirements. The easing in oil prices also provided some support to the rupee, which strengthened marginally against the US dollar in early trading.
Financial stocks emerged among the strongest performers as investors responded positively to quarterly business updates and developments in the banking sector.
HDFC Bank gained after the appointment of Anup Bagchi as its next Managing Director and CEO. Punjab National Bank and Bank of Baroda also advanced after reporting strong growth in advances during the September quarter. Bajaj Finance was another major gainer after reporting an 11% year-on-year increase in new loans.
The IT sector also found support following Accenture's better-than-expected results and business outlook. The development was viewed as a positive signal for Indian technology companies, particularly after sustained concerns surrounding global technology spending and the impact of artificial intelligence on traditional IT services.
Global market sentiment improved after softer-than-expected US employment data reduced expectations of aggressive monetary tightening by the US Federal Reserve. Asian equities also opened largely higher, adding to the positive backdrop for Indian markets.
However, analysts have cautioned that several risks remain, including elevated crude prices, high US bond yields and continued foreign investor selling. The RBI's monetary policy decision later this week is another key event that could influence market direction.
For now, Monday's gains provide some respite to investors following the benchmark indices' extended losing streak, although the sustainability of the recovery will depend on global cues, oil prices, foreign flows and upcoming domestic economic signals.
