The Sensex rose nearly 1,000 points from Friday’s close to an intraday high of 60,833, before ending the session at 60,566, up 721 points, or 1.20%. The Nifty, too, advanced 1.2%, or 207 points, to close at 18,014.
“It is just a technical bounce. We do not see the market getting into the recovery zone yet,” said Rajesh Cheruvu, chief investment officer, LGT Wealth India. “We will continue to see volatility and markets may remain in a selloff mode for a while before you get a pre-budget rally.”
Foreign portfolio investors (FPIs) were net sellers in the cash segment worth ₹497 crore, showed provisional data from the stock exchanges. Their domestic counterparts, however, lapped up shares to the tune of ₹1,285, data showed.
India’s Volatility Index, or VIX – a measure of traders’ expectations of near-term risks to the market – fell 1.4% to 15.93 before rising to day’s high of 17.23. In the last one month, the Vix has risen 20% and broke above 16, which indicates a move towards wild price swings.
“Some sort of pullback was in the offing,” said Viraj Vyas, derivatives and technical analyst – institutional equities, Ashika Group. “The last week of December usually spells cheer for our markets. Both the indices were deeply oversold. The absence of FPI volumes and strong support at 17,800 is what contributed to the rise.”
Key indices fell over 1.5% on Friday to take their weekly losses to nearly 3% as the risk-off sentiment intensified worldwide on renewed concerns over the spread of Covid following the strict commentary by policy makers at global central banks to keep interest rates elevated despite early signs of cooling-off in consumer prices.
Cheruvu expects price swings over the next three-to-six months due to the global uncertainty over growth, but is advising investors to use the opportunity to increase equity allocation. “We are positive on the Indian markets. If you look beyond six months, macroeconomic as well as corporate earnings growth looks quite promising. One must build equity positions during these volatile times,” he said.
Banking stocks led gains on Monday. Barring the Healthcare index, all sectoral indices ended in the green. Rising stocks outnumbered the losing ones on BSE by 3.65-to-1. On NSE, 1,710 stocks advanced against 205 that ended weak.
