Markets soar over 1.5% as Adani Group concerns ease; bank stocks lead

India’s benchmark indices recorded their best day in nearly four months on Friday, a day after a $1.87-billion (Rs 15,446-crore) investment by US-based boutique investment firm GQG Partners in four Adani companies assuaged investor concerns.

Supportive global cues on the back of positive economic data and less hawkish Fed statements, and value buying following a decline in the market in nine of the previous 10 trading sessions, also aided the rally, with banking stocks leading the gains.

The Sensex surged 900 points, or 1.53 per cent, to close the session at 59,809, while the Nifty50 index settled at 17, 594, with a gain of 272 points, or 1.57 per cent. These were the best single-day gains for both the indices since November 11, 2022. The Bank Nifty index rose 2.1 per cent, while the Nifty PSU Bank index zoomed 5.4 per cent.

Most global markets rose on Friday, taking comfort in Federal Reserve President Raphael Bostic’s statement that central bankers need not lift borrowing costs higher than the 5-5.25 per cent range. Bostic said it is more prudent to have smaller rate hikes as the effect of monetary policy on the economy is a bit lagged. Bostic further said a measured approach will reduce the likelihood of hard outcomes.

Analysts said investors are now expecting quarter-point rate hikes by the US Fed.

“The market still wants to remain optimist and is rallying after any less hawkish comments. The volatility around data will determine the market trajectory for the next three months, particularly ahead of the Fed meeting. And you are going to get bouts of optimism and pessimism, which will lead to sectoral rotation that we are seeing in our markets for the last few months,” said Andrew Holland, CEO of Avendus Capital Alternate Strategies.

The expansion of the services sector also aided sentiment. The S&P Global India Services Purchasing Managers’ Index rose from 57.2 in January to 59.4 in February, its highest since February 2011.

“The market had more reasons to cheer today than to worry about concerns regarding inflation. PSU Banks led the sectoral rally as reports of foreign investments in Adani stocks helped the sector in recouping the dampened sentiments. The sentiment was further lifted by FIIs turning strong buyers. Positive global sentiments also played a vital role in uplifting the market, as a Fed official commented on a favourable level of a rate hike in the next meeting,” said Vinod Nair, head of research, Geojit Financial Services.

All Adani group stocks rose on Friday, with flagship Adani Enterprises gaining the most at 17 per cent.

Foreign Portfolio Investors bought shares worth Rs 246 crore, provisional data from the exchanges revealed. The market breadth was positive with 2,146 stocks advancing and 1,370 stocks declining. Four-fifths of the Sensex stocks gained. Reliance Industries rose 2.5 per cent and contributed the most to the Sensex gains.