Share Market Today: Indian stock markets made a strong comeback on Tuesday, January 14 and started trading on a positive note, recovering from Monday’s seven-month low. Investor confidence appeared to be back due to better global cues, strengthening rupee and other domestic factors. The rise in shares of Adani Group and stability in valuations of big companies also promoted this recovery. By afternoon, the BSE Sensex was trading 308 points or 0.4% higher at 76,638 and the NSE Nifty was trading 108 points or 0.5% higher at 23,194. Both indexes rose up to 0.7% in early trade.
After yesterday’s crash, there were 5 big reasons behind the rise in the stock market today-
1. Better global signal
Recent reports have indicated that Donald Trump may implement gradual tariff increases in a phased manner rather than a large increase all at once after becoming president. This will reduce the risks related to inflation. There was some relief from this news in the stock markets globally. Asian markets of China, Hong Kong, Sydney and Taiwan witnessed a rise. US equity futures extended Monday’s modest recovery. S&P 500 futures were up 0.3% today.
Meanwhile, the dollar index also declined from 109.95 to 109.54, which brought relief to the stock markets of emerging countries. US Treasury yields also remained stable and the 10-year bond yield currently stands at 4.77 percent. Now investors’ eyes are fixed on the US Producer Price Index (PPI) data to be released today.
2. Stability in rupee and crude oil prices
The Indian rupee today opened slightly stronger at 86.52 per dollar, having touched a historic low of 86.69 a day earlier on Monday. Weakness in the dollar index supported the rupee, which provided relief to import-dependent sectors.
Crude oil prices also declined in trading on Tuesday. However, they still remain close to the highest level in 4 months. Brent futures fell 0.27% to $80.79 a barrel. After the new sanctions imposed by America on Russian crude oil, buyers from India and China are looking for new suppliers.
3. Relief from softening inflation
India’s retail inflation fell to 5.22% in December, a four-month low. This is lower than the market estimate of 5.3%). Inflation in both rural and urban areas declined due to fall in prices of food items and temporary decline in crude oil prices. Analysts believe that reduction in inflation may support demand, which may provide relief to policy makers.
4. Oversold market attracted buyers
Market experts said that due to the recent fall, shares of many large companies had also gone into the oversold zone, which has attracted buyers. “After Monday’s huge fall, the bulls have taken charge again. This was expected earlier, but right now it seems like just a temporary bounce,” said Anand James, Chief Investment Strategist, Geojit Financial Services.
Surendra Goyal, head of research, Citi India, said valuations of large companies have returned to the 5-year average, making them a better opportunity than midcap and smallcap stocks.
5. Rise in shares of Adani Group
There was a huge rise in the shares of Adani Group today. Adani Enterprises and Adani Ports gained 7.9 percent and 5.8 percent respectively and emerged as the top gainers of Nifty today. Shares of other companies of the group remained on the rise. Adani Power surged 17% and Adani Energy Solutions surged over 12%, reflecting increased investor confidence in the Adani Group.
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