India’s benchmark indices recorded the longest weekly winning streak, since September 24th, 2021, to conclude the week ended Friday, January 14th with significant gains. Friday’s closure of market action signified the fourth successive week in which the indices have encountered growth, presenting, to an extent, more relief amongst Indian investors.
Exhibiting a similar trend to previous weeks, NSE Nifty and BSE Sensex bore witness to another bullish week, registering growths of 2.1% and 1.7% respectively. Indian markets have displayed considerable resilience toward feeble global cues and indicators, a behavioural pattern which investors hope continues onto the forthcoming weeks.
In spite of a productive week, Friday’s trading session proved to be an outlier as both indices snapped a 4-day winning streak to marginally conclude in the red. Despite sluggish global trends and commencing the day on a negative note, the markets were capable of negating the majority of the intraday losses that were faced, to close flat and conclude with minimal decreases. Nifty 50 and Sensex both concluded the week with valuations of 18,255.75 and 61,233.03 respectively.
Robust market performance this week can largely be accredited to high performances exhibited by IT stocks, whilst metal sectors also propelled considerable growth. The BSE midcap index and BSE smallcap index increased by 0.2% and 0.5% respectively on Friday, whereas stocks in other sectors, such as FMCG and telecom, bore the brunt of selling pressure on the trading day.
Both indices are edging closer towards exceeding their all time peaks which were achieved on October 18th, with Sensex registering a high of 61,765 and Nifty recording an apex of all-time 18,477. After a few months of prevalent degrading progressions and falling performances, a strong response over the last month has enabled for a rebound in market performances.
The alteration of fortunes has left an impression of pragmatic satisfaction amongst investors, that are content with the growth of markets. This is evidenced by Siddartha Kehma’s, Head of Research at Motilal Oswal Financial Services, remarks stating that “Valuations are no longer cheap and require strong earnings delivery for sustenance of positive momentum in the market.”
In spite of the recent growth phases, markets not just in India but globally as well still face an uncertain period of high volatility, owing to a multitude of factors. The alarmingly rapid propagation of the Omicron variant (B.1.1.529 strain) has instigated massive surges in cases internationally, quickly becoming the dominant strain. Night curfews, restricted movements and weekend lockdowns are once again becoming a prevailing trend in the country, which serves as a looming threat towards a complete market recovery.
Exacerbation of inflation rates is only contributing further to the uncertainty. Inflation rates have considerably increased globally, notably in the US, which reported the Consumer Price Index (CPI) inflation rates in over 4 decades. The Fed’s decision to commence hiking interest rates has prompted large scale selloffs and dampening equity environments, which will continue to dampen aspirations of significant market growth. India’s CPI inflation, for the month of December 2021, was recorded at 5.59% year-on -year.
Written and collated by Ronojoy Borpujari
Written with input from Money Control and The Economic Times