Domestic equity benchmarks ended with solid gains on March 3 as investor sentiment improved after GQG Partners, a US-based asset manager, acquired a significant amount of shares in four Adani Group companies.
The Adani-Hindenburg saga has been one of the biggest reasons behind the underperformance of the Indian market recently.
A US short-seller Hindenburg Research releases a report on the Adani Group on January 24, alleging "brazen accounting fraud, stock manipulation and money laundering" for over a decade.
Adani Group stocks came under strong pressure after the release of this report and subsequently, PSU banking stocks also started falling on concerns over their exposure to the Adani Group even though several analysts and brokerage firms expressed that the banks' debts to the Adani Group were manageable.
Adani Group stocks rose with healthy gains on March 3, improving the overall market sentiment, as GQG Partners acquired 21 crore shares worth ₹15,446 crore in four Adani Group companies - Adani Enterprises Ltd, Adani Ports and Special Economic Zone Ltd, Adani Green Energy Ltd, and Adani Transmission Ltd on March 2 via block deals.
Besides, encouraging macroeconomic prints also underpinned market sentiment.
As per a PTI report, the Indian services sector expanded at the strongest rate in 12 years in February supported by favourable demand conditions and new business gains. The S&P Global India Composite PMI Output Index -- which measures combined services and manufacturing output -- rose from 57.5 in January to 59 in February.
Positive global cues offered a further boost. After gains in the US equities, major Asian and European shares also traded in the green.
Asian shares rose on Friday on prospects for a steady economic recovery in China, and after Wall Street reversed losses overnight following remarks by the Atlanta Federal Reserve chief that signalled a measured approach to raising US interest rates, reported Reuters.
Sensex opened 332 points higher at 59,241.20 against the previous close of 58,909.35. The index jumped as much as 1,058 points to an intraday high of 59,967.04. The index finally closed with a gain of 900 points, or 1.53 percent, at 59,808.97. The Nifty50 index settled at 17,594.35, up 272 points, or 1.57 percent.
Mid and smallcaps also clocked gains but underperformed the benchmarks. The BSE Midcap index rose 0.58 percent while the Smallcap index ended 0.68 percent higher.
The overall market capitalisation of BSE-listed firms jumped to ₹263.4 lakh crore from ₹260 lakh crore in the previous session, making investors richer by ₹3.4 lakh crore in a single session.
Crude oil prices traded volatile due to optimism about China's demand recovery and concerns over a recession in the US and Europe which could keep the fuel demand low. Brent Crude traded near the $84 per barrel mark. The rupee ended with a strong gain of 62 paise at 81.97 per dollar.
Top Nifty gainers: Shares of Adnai Enterprises (up 16.60 percent), Adani Ports (up 9.76 percent) and State Bank of India (up 5.11 percent) ended as the top gainers in the Nifty index.
Top Nifty losers: Shares of Tech Mahindra (down 2.09 percent), UltraTech Cement (down 0.94 percent) and Cipla (down 0.87 percent).
As many as 42 stocks ended in the green in the Nifty50 index while 7 ended in the red and one - Coal India - ended flat.
All sectoral indices ended with gains, with the Nifty PSU Bank index jumping 5.40 percent. PSU banking stocks jumped after GQG Partners invested ₹15,446 crore in four Adani Group companies. Analysts pointed out that this money will be mainly used for retiring debt, which means that the banks that had funded Adani companies will not face any stress.
Nifty Bank index jumped more than 2 percent while the Nifty Metal index clocked a gain of 3.55 percent. Nifty Financial Services, Private Bank, FMCG, Media, Realty and Oil & Gas rose over a percent each.
Experts' views on markets
Vinod Nair, Head of Research at Geojit Financial Services underscored that the market had more reasons to cheer today than to worry about concerns regarding inflation.
"PSU Banks led the sectoral rally as reports of foreign investments in Adani stocks helped the sector in recouping the dampened sentiments. The sentiment was further lightened as FIIs turned in strong buyers. Positive global sentiments also played a vital role in uplifting the market, as a Fed official commented on a favourable level of a rate hike in the next meeting," said Nair.
Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services said that Indian equities cheered the dovish commentary from one of the US Fed officials along with robust domestic services PMI data.
"Nifty is finding some support after declining almost 9 percent from its peak. While Domestic macro data continues to remain strong, global uncertainty regarding the next US Fed action has kept the markets volatile," said Khemka.
Technical views on markets
As per Amol Athawale, Deputy Vice President of Technical Research at Kotak Securities, the Nifty has formed a double bottom near the 200-day SMA (simple moving average) and bounced back sharply.
Athawale pointed out that the index has also formed a promising bullish candle on the daily and weekly charts, supporting further uptrend from the current levels. As long as the index is trading above 17,400 the uptrend wave is likely to continue.
"For short-term traders, 17,550-17,500 would be the immediate support level while 17,700-17,850 is the crucial resistance," said Athawale.
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas observed that on the daily charts, the Nifty has retraced 38.2 percent of the fall from 18,134 to 17,255.
"We believe that there is more steam left to this pullback rally and hence it can extend higher till 17,700 where resistance in the form of the 50 percent Fibonacci retracement level (17,695) and the 20-day moving average (17,703) is placed," said Gedia.
"Considering the sharp up-move in today’s trading session a consolidation cannot be ruled out. Overall, we expect the Nifty to trade in the range of 17700 – 17200 from a short-term perspective," Gedia said.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.