Sensex posts big-time rebound
mumbai/london — India’s benchmark index rebounded, recouping a year-to-date advance, as some investors judged Thursday’s selloff as excessive.
The benchmark S&P BSE Sensex Index rose 2.2 per cent to close at 34,733.58 in Mumbai, its biggest advance in more than two years. The gauge had erased its year-todate gain on Thursday, despite posting its best weekly performance since July.
On Friday, all except two of 19 sector sub-indexes compiled by BSE ended higher, led by automakers and energy companies as the price of crude oil headed for the biggest weekly decline since May. Tata Consultancy Services, the nation’s biggest IT company, was the biggest laggard after reporting earnings.
“Some stocks are getting attractive,” after recent declines, Paras Bothra, president of research at Ashika Stock Broking said. “However, investors remain cautious and are seeking more clarity on the outlook for corporate earnings and economic growth.”
The Sensex’s relative strength index dropped back below a threshold on Thursday indicating potential overselling, after the gauge fell last week, sliding more than 10 per cent from a peak in August.
Indian equities — Asia’s top performers until recently — have retreated amid a flurry of bad news, from surging oil prices and a slumping rupee to a rout in non-bank lenders following defaults at an infrastructure financier.
Further erosion may affect flows to mutual funds, which have repeatedly buffered the nation’s $2 trillion market against the risk-off mood.
Although positive trade data from China and reports of Trump meeting Xi at G20 has rekindled risk appetite, stock markets are not out of the woods yet
Lukman Otunuga, Analyst at FXTM
World equities recover too Global stock markets also staged a rebound on Friday, albeit a mild one, one day after ferocious losses sparked by heightened economic concerns, notably over rising US interest rates that have drawn attacks from President Donald Trump on his “crazy” central bank.
Asia enjoyed healthy gains, with star performer Hong Kong surging 2.1 per cent, Shanghai up 0.9 per cent and Tokyo adding 0.5 per cent, at the end of a traumatic week for investors worldwide.
The rebound was tame however, with Hong Kong and Shanghai slumping 3.5 per cent and 5.2 per cent respectively on Thursday.
Europe chased Asia higher on Friday, with Frankfurt up 0.5 per cent, Paris gaining 0.4 per cent and London winning 0.7 per cent as investors scooped up cheaper equities, which are widely regarded as a risky bet in times of economic turmoil.
The dollar recovered versus the euro and yen, while oil futures bounced back.
“The brutal selloff that engulfed global stocks this week took a pause on Friday as risk sentiment slightly improved across financial markets,” noted analyst Lukman Otunuga at trading firm FXTM.
“In Europe, stocks continue to march higher on positive global cues which could support Wall Street later in the afternoon.
“Although positive trade data from China and reports of US President Donald Trump meeting Chinese President Xi Jinping at the G20 summit next month has rekindled risk appetite, stock markets are not out of the woods yet,” Otunuga added.
The futures market pointed to gains worth several hundred points when the Dow Jones opened later on Friday, after the US index lost more than 1,300 points in a twoday stocks bloodbath.
Analysts cautioned that the US earnings season — which cranked into action later on Friday — could indicate whether markets have bottomed out or not.
“The rebound appears to offering a brief respite for investors at what has been an absolute shocker of a week,” noted CMC Markets analyst Michael Hewson. “While the respite is welcome it remains to be seen whether we have seen the bottom in the short term.
“The beginning of US earnings season could well offer clues with particular attention likely to be on companies’ forward projections for profit and revenue guidance,” he added. —