Sensex Jumps About 700 Points, Riding Higher On A Global Optimism Wave

Indian equity benchmarks jumped on Thursday, riding higher on investor optimism driven mainly by a rally on Wall Street tracking robust US company earnings, but global economic growth fears, a slowdown in demand from China's stringent restrictions, and Europe's energy crisis persist.

In what has been an extremely volatile week, the 30-share BSE Sensex index rose 700 points to about 57,521, and the broader NSE Nifty gained 1.2 per cent to 17,245, after having fallen nearly 1 per cent in the previous session.

On Tuesday, the Sensex had jumped nearly 800 points to around 57,356, while the Nifty had risen almost 1.5 per cent to about 17,200, after both the indexes had declined over 1 per cent on Monday.

"The real question is, whether this (the rise in stocks today) really matters for a durable turnaround in otherwise fraught global circumstances," Vishnu Varathan, head of economics at Mizuho Bank in Singapore, told Reuters.

"Volatility is still high .. .even if not outright fear, the trepidation is hard to miss with on-going uncertainty from the war in Ukraine, which continues to threaten with more widespread economic pain," he added.

Indeed, volatility was expected to continue in the near term as surging inflation has set major central banks on an aggressive tightening path, which has driven global economic growth risks, and as the Russia-Ukraine conflict shows no signs of abating anytime soon.

Russia's decision to halt gas supplies to Bulgaria and Poland sent tremors through European energy markets and whacked global financial markets. That has added to the sour mood amongst investors already reeling from China's COVID surge and renewed stringent restrictions.

The flight-to-safety trades helped the dollar index, which measures the greenback's performance against six of its major peers, to a five-year high of 103.28, and a further push above 103.82 would see it to levels not visited since late 2002.

"With COVID lockdown fears in China exaggerating upside risks for the dollar, we recognise the possibility of a stronger-for-longer dollar," Jane Foley, Head of FX Strategy at Rabobank, told Reuters.

In addition, persistent capital outflows have weighed on domestic stocks. According to the latest stock exchange data, foreign institutional investors (FIIs) continued to be net sellers, offloading shares worth Rs 4,064.54 crore on Wednesday.

In the domestic market, Hindustan Unilever Limited, Asian Paints, NTPC, Power Grid, Larsen & Toubro, State Bank of India, Infosys, Axis Bank, and Reliance Industries were among the major gainers in the Sensex pack.

Shares of Reliance Industries Ltd (RIL) rose 1.5 per cent to hover near record highs after the conglomerate said an investment company set up by Rupert Murdoch's son James and former Disney India executive Uday Shankar would invest Rs 13,500 crore in Mukesh Ambani's broadcasting business Viacom18.

In contrast, Bharti Airtel, M&M, HCL Technologies and HDFC Bank were the laggards.

The rout in shares of Future Group companies continued for the fourth day in a row — Future Consumer crashed nearly 10 per cent, while Future Enterprises and Future Retail were down about 5 per cent, on increasing concerns that the group faces bankruptcy risk after the Reliance deal failed.

Zee Learn tumbled nearly 10 per cent after the National Company Law Tribunal (NCLT) issued notice on Yes Bank's initiation of insolvency proceedings against the firm.