Peace hopes give Sensex a 740-point lift

The Sensex ended up 740.34 points, or 1.28%, at 58,683.99; and the Nifty ended up 172.95 points, or 1%, at 17,498.25. Among other Asian markets, the Shanghai Composite rose 2% on Wednesday and Hong Kong’s Hang Seng index moved up by 1.4%. Markets in South Korea, Taiwan and Singapore gained 0.2-1.1%.

Analysts said de-escalation of tensions between Russia and Ukraine will be crucial for renewed strength in the market.

“It is positive for global markets if there is some sort of settlement and no further escalation in tensions which will hopefully result in some stability in oil and gas prices as well as other commodity prices,” said Sanjeev Prasad, co-head, Kotak Institutional Equities.

Investors have been hoping for a de-escalation of the war that began at the end of February. Russia invaded Ukraine in what it called a special military operation on February 24. The subsequent global market panic and foreign investors’ selling saw India’s stock indices falling over 8%, with the Nifty falling to sub-16,000 level. The indices have risen more than 11% from their March lows.

Analysts said the recent resilience in the market despite the US Federal Reserve’s hawkish outlook on interest rates and elevated commodity prices have raised hopes that the market will not fall sharply from these levels.

“The downside is limited from here, traders are holding bullish positions. 17,000-17,100 on a broader level is a good support,” said Abhilash Pagaria, head of alternative and quantitative research, Edelweiss Financial.

“The index can go to 17750-17800 in the near term.” Morgan Stanley said it expects volatility to persist going into the next quarter as the market deals with geopolitics, a possible new domestic rate cycle, global tightening and likely erratic growth data.

On Wednesday, FPIs bought Indian shares worth 1,357.47 crore. Domestic Institutions too bought shares to the tune of 1,216 crore. A silver lining for Indian equities is that the extent of FPI selling has subsided amid intermittent purchases by them, reducing the pressure on the market. Between February 23 — a day before Ukraine invasion — and March 9, FPIs sold an average of 5,600 crore worth of Indian shares every day.