Mumbai : Indian stocks started the week on a strong note, closing nearly 2% higher on Monday, as the onset of monsoon and return of risk sentiment globally after China’s easing of pandemic-related restrictions cheered investors .
The Sensex rose 1,041 points or 1.9%, while the Nifty ended 308.95 points higher by 1.89%. Monday was the third consecutive day when the indices closed in the green.
Siddharth Khemka, Head of Retail Research, Motilal Oswal Financial Services Ltd, said, “Indian markets witnessed a rally on positive global cues and early onset of monsoon, raising expectations of a slowdown in inflation.”
Asian and European markets witnessed positive investor sentiment on Monday, following a strong Wall Street closing on Friday, driven by moderation in US inflation and the easing of COVID restrictions by China.
US markets saw a broad rally on Friday led by technology stocks, helping US indices report their best week in 18 months. The S&P 500 gained 2.47%, the Dow Jones Industrial Average gained 1.76% and the Nasdaq 3.33%.
In Asia too, markets closed higher on Monday, with Japan’s Nikkei closing 2.19% higher and Hong Kong’s Hang Seng index up 2.12%. European markets also closed with gains.
“A near-term trend reversal is visible in the domestic market, supported by valuation relaxations and positive trend in global counterparts. US stocks rose on softening inflation concerns, which will be instrumental in setting the tone of an upcoming Fed policy meeting. Vinod Nair, Head of Research, Geojit Financial Services, said the easing of the long-running lockdown in China helped lift sentiments in Asian markets.
While Indian markets have started the week on a positive note, any further relief from recent selling pressures will largely depend on the actions of the central bank both globally and domestically in the fight to contain inflation. In addition, investors will also be keenly watching GDP growth numbers and other economic indicators such as the Purchasing Managers’ Index, which are expected this week.
“During the week, investors will take cues from US non-farm payroll data on the global front as well as auto monthly sales numbers and manufacturing PMI data on the domestic front. Giving direction to the market, the government will announce the GDP figures on May 31. Though markets have recovered, inflation at the global level and action by central banks will be the key to sustain this momentum,” Motilal K Khemka said.
Consumer durables, information technology, oil & gas, and realty led the market rally.
“Among the sectors, realty, IT, oil and gas, capital goods and consumer durables grew the most. Deepak Jasnu, Head of Retail Research, HDFC Securities, said, “Broad market outperformed and midcap and smallcap indices edged higher than Nifty and the advance-decline ratio was sharply positive.
Broader markets outperformed the benchmarks on Monday with Nifty Midcap 100 closing 2.4% higher and Nifty Smallcap 100 3.1% higher.
According to provisional data available with stock exchanges for May 30, foreign institutional investors (FIIs) were net buyers of Indian equities, with net purchases of shares. 502 crores. FIIs have sold Indian shares so far in April 38,949 crores.
On the other hand, domestic institutional investors bought equities worth 1,524 crore on Monday. In May, he bought equity worth 47,465 crores.