The Indian stock markets surged on Thursday recouping nearly 3% from the sell-off on Monday. The BSE Sensex ended at 46,973.54, up 529.36 points or 1.14%. The Nifty closed at 13,749.25, up 148.15 points or 1.09%. Despite a harsh sell-off on Monday, the markets made the longest stretch of weekly gains at least since 2018.
Global markets were supportive with South Korea’s Kospi, Japan’s Nikkei 225 and Taiwan’s Topix index gained 0.5-2%. Markets in Australia, Hong Kong and Singapore closed early for Christmas Eve.
“Government’s plan to set logistics ready to vaccinate frontline health workers in the first phase boosted investor sentiments. Momentum in European markets on hopes of Brexit deal also helped Indian indices to trade higher, financials and pharma sector contributed in the rally. Volatility noticed at the start of the week vanished by the end of the week as concern over new strain of virus reduced, development on the US stimulus and vaccination,” Vinod Nair, Head of Research, Geojit Financial services said.
Domestic equity markets were volatile during the week ended as investors were concerned about the new strain of the covid-19 virus found in the UK.
“With lockdowns being enforced in many parts of Europe and UK, there were some renewed concerns among foreign institutional investors (FIIs). On the global front, US markets remained buoyant ahead of the Christmas break as investors cheered a potential Brexit deal and signs of an economic recovery. US economic data showed lower jobless claims and an uptick in new orders for durable goods,” Shibani Sircar Kurian, EVP and Head of Equity Research, Kotak Mutual Fund said.
FIIs have been driving the domestic markets higher with a net inflow of over $2 billion in Indian shares in December so far after pumping record $9.55 billion in the previous month. As domestic institutional investors are missing in action, FIIs are expected to keep supporting buoyancy in the markets.
“Sustainability of economic recovery and Q3FY21 earnings are likely to play important roles for domestic markets in the near term. However, considering rich valuations and threats from rising input costs, we believe a broad-based rally in the market might not sustain,” Binod Modi, Head Strategy, Reliance Securities.
(Ashwin Ramarathnam contributed to the story)
