Indian shares rebound on easing US rate concerns, eyes on Middle East

Indian shares experienced a strong rebound on Tuesday, following the positive trend in global stocks and alleviating concerns over U.S. interest rates. The NSE Nifty 50 index rose by 0.53% to reach 19,616.15, while the S&P BSE Sensex climbed 0.56% to 65,874.50. This resurgence was reflected across various sectors, with twelve out of thirteen major sectoral indexes recording gains.

The financial sector, which holds significant weightage, saw a 0.5% increase, while public sector banks rebounded strongly, surging by over 1.3%. The realty index also performed exceptionally well, rising by 3% following a remarkable quarterly update from Phoenix Mills, which saw a 3% jump in their stock price. Furthermore, the automotive sector witnessed a 1.25% increase, led by a 2% rise in Tata Motors. This surge was driven by CLSA’s projection of improved sales volumes, resulting in a predicted rise in the company’s fiscal 2025 profit.

Interestingly, the small- and mid-cap stocks, which are more domestically focused, outperformed the blue-chip stocks, with both rising by nearly 1%. Analysts at Motilal Oswal Financial Services noted that the current valuations in industrials, consumer discretionary, mid- and small-caps are at a premium compared to their long-term averages. As a result, they anticipate continued sector rotation within the Indian equities market, with valuations becoming a crucial factor in stock selection.

The positive sentiment in Indian markets mirrored the performance of Wall Street, which closed higher on the previous day. This was attributed to two U.S. Federal Reserve officials suggesting that further rate hikes may not be necessary, thereby easing concerns regarding interest rates. Asian markets also experienced a slight uptick.

However, amidst the market rally, investors remained watchful of the military conflict between Israel and Hamas, which had an impact on risk sentiment. Consequently, safe-haven assets like gold and the U.S. dollar saw increased demand. Additionally, Brent crude futures hovered around $88 per barrel on Tuesday.

In terms of individual companies, Adani Ports rebounded strongly, rising by 3% after a brief slide of nearly 5% the previous day. Concerns over the conflict in Israel, where the company owns a major port, had initially affected its stock performance. Mazagon Dock Shipbuilders also experienced a significant boost, climbing by 7% after signing a letter of intent with a European client to construct multi-purpose hybrid power vessels.

Overall, the Indian stock market showcased resilience and regained its positive momentum, driven by global cues and improved investor sentiment. With the ongoing sector rotation and the importance of valuations in stock selection, investors are advised to carefully consider their investment choices. As the market continues to evolve, it is essential to stay informed and make informed decisions based on the prevailing market conditions.

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