Markets leave Evergrande woes behind
The benchmark equity indices bounced back after falling in the previous two sessions as investors looked to shrug off the fears of contagion from a potential collapse of China’s realty giant Evergrande. Shares of metal and real estate firms saw a sharp rebound, improving investors’ mood.
Most global markets also rallied, even as investors remained cautious ahead of the US Federal Reserve policy meeting. Experts said concerns over the Evergrande debt crisis moderated, leading to an improved risk appetite.
The benchmark Sensex on Tuesday ended the session at 59,005, after gaining 514 points or 0.8 per cent. The Nifty50, on the other hand, ended the session at 17,562 -up 165 points or 0.95 per cent. In the previous session, the indices had fallen by an equal measure.
“The Domestic benchmark indices witnessed sharp recovery, led by a brisk rebound in defensive sectors like IT, pharma, and FMCG.
Further, the Nifty Metal witnessed strong rebound as investors utilised steep corrections in metals stocks as an opportunity to buy the dips,” said Binod Modi, head strategy, Reliance Securities.
The BSE Realty index rose 3.5 per cent amid valuebuying, after two days of decline, following signs of a rebound in sales for home builders and the easing of Covid-19 restrictions.
“Global stocks, too, recovered from the fears sparked by troubles in the Chinese economy, ahead of the Fed meeting. All major sectors traded in the green zone, though the auto sector remained under pressure due to rising input costs and the semiconductor shortage faced by the global auto industry,” said Vinod Nair, head of research, Geojit Financial Services.
Experts said investors would be keenly watching the Fed’s meeting where the central bank is expected to come up with a roadmap on tapering its bond-buying programme. Investors are also keeping a tab on central bank meetings in other countries as they are assessing risks associated with the prospects of reduced central bank support.
This week investors had to grapple with many concerns, ranging from stretched equity valuations, slower-thanexpected resumption of economic activity due to concerns surrounding the Delta strain, and the fall in commodity prices. The markets are also digesting the outlook of reduced central bank policy support. “Today’s recovery in equities shows that the markets have discounted possible fallout from the likely default of Chinese real estate giant. Thursday would be crucial as the $83-million interest payment is due for Evergrande. The increasing possibility of earnings downgrade in the US markets following a sharp rise in the Covid caseload and the continued reform measures undertaken by the government in India have revived FIIS' interest in the domestic market,” Modi said.