Sensex Rallies Over 1,000 Points To Above The 58,000 Mark, But Risks Remain

Domestic equity benchmarks rallied sharply on Friday, reflecting a rise in Asian bourses after Wall Street stocks overnight made a remarkable comeback and closed significantly higher after a deep sell-off earlier in an extremely volatile session.

The BSE Sensex index jumped 1,087.14 points to 58,322.47 in early trade, and the broader NSE Nifty climbed 317.3 points to 17,331.65.

All Sensex constituents rose, with Infosys trading over 4 per cent higher, followed by HCL Technologies, Tech Mahindra, ICICI Bank, HDFC Bank, Larsen & Toubro, State Bank of India, Kotak Mahindra Bank, and HDFC Ltd.

The second-largest provider of IT services in India, Infosys, reported a better-than-anticipated 11 per cent increase in consolidated net profit for the September quarter at Rs 6,021 crore and a Rs 9,300 crore share repurchase programme on Thursday.

Early Asian trading saw about a 1.5 per cent increase in MSCI's broadest index of Asia-Pacific shares outside of Japan. South Korea surged 2 per cent, Australia's resource-heavy share index rose more than 1.6 per cent, and Japan's Nikkei increased by over 2.5 per cent.

Chinese blue-chip index opened nearly 1 per cent higher as the Governor of the central bank of China vowed increased support for the real economy as COVID lockdowns expanded ahead of the crucial Communist Party Congress.

Investors had sold off stocks earlier in the week in anticipation of a high US inflation reading; thanks to Friday's rebound, the Asian index has pared its weekly losses to just under 3.5 per cent.

On Thursday, US core inflation, which excludes food and fuel prices, exceeded expectations and came in at 6.6 per cent, the largest annual increase in 40 years, driven primarily by significant price increases in the services sector.

But softening risk appetite was already evident, with US futures pointing to a lower opening.

"There are no convincing ways to explain overnight equity moves in the US in the face of the higher-than-expected inflation release for September," said Robert Carnell, Regional Head of Research for Asia-Pacific at ING.

"So on almost every metric, these figures shout that the Fed will be raising rates faster, taking them higher and leaving them there longer than the market had been anticipating. And that raises the prospects of recession, even a bad recession," he added.