Indian Stocks Surge Following Positive US Inflation Data
Published on: October 27, 2023.
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Indian Stocks Rebound as U.S. Treasury Yields Retreat
After six consecutive sessions of losses, India’s blue-chip stocks saw a positive upturn on Friday. This came as U.S. treasury yields pulled back following weaker-than-expected inflation data, alleviating concerns about interest rates.
As of 10:04 a.m. IST, the NSE Nifty 50 index rose by 0.85% to 19,016.85, while the S&P BSE Sensex increased by 0.86% to 63,692.09.
All 13 major sectors registered gains, and 46 of the Nifty 50 stocks experienced a rise.
Small- and mid-cap stocks, which are more focused on the domestic market, demonstrated an even greater increase, with small-caps rising by 2% and mid-caps by 1.5%.
This rebound in the domestic equities market follows a six-day losing streak, during which the benchmarks experienced a nearly 5% decline and a slump to near four-month lows.
Analysts from Kotak Institutional Equities commented on the recent correction in stock prices, stating that it was still relatively small compared to the significant rally witnessed in small- and mid-caps over the past several months. They further noted that large-cap stocks offered a more balanced risk-reward ratio in comparison.
While small-caps and mid-caps have experienced losses of nearly 5% and over 6% in recent sessions, respectively, they have witnessed gains of 30% and 23% so far in 2023, outperforming the Nifty 50 index, which has risen by 5%.
The retreat in U.S. treasury yields was driven by data indicating a cooling in inflation. Previously, high U.S. yields had triggered foreign selling and, combined with the conflict in the Middle East, had put pressure on Indian equities over the past two weeks.
Anita Gandhi, the director and head at Arihant Capital, described the correction in Indian shares as a “healthy” response to the sharp uptick witnessed in recent times. Gandhi also provided insight into the future outlook, stating that the Nifty 50 is likely to find support near levels between 18,600-18,800, with resistance at 19,100-19,200 over the next few sessions.
Rice exporters, including Chaman Lal Setia, LT Foods, and KRBL, saw gains between 2% and 4% following reports that the government reduced the floor price for basmati rice exports from $1,200 to $950 per metric ton.
Source: Zawya
