The rebound boosted the market value of all BSE-listed companies by ₹30.1 lakh crore during the week, helping recoup some of the losses posted since the West Asia war erupted on February 28. The sell-off had wiped off ₹41.36 lakh crore in market cap until April 2. The two-week truce between the US and Iran announced earlier this week was a turning point for oversold markets with renewed hopes of peace in the region triggering a rally in equities and a drop in crude prices below $100 a barrel. “Investors have been looking at some kind of positive affirmation around the geopolitical news and once the 15-day ceasefire was announced, jumped in,” said Abakkus Mutual Fund chief executive officer Vaiibhavv Chugh.
ETMarkets.comFPI Trades Turn Positive
Brent crude futures were down 0.1% at $95.68 on Friday, after touching nearly $120 at the start of the conflict.
Market direction next week will hinge on the outcome of negotiations in Islamabad, with investors watching closely whether Iran agrees to reopen the Strait of Hormuz to tanker traffic. The US has warned that a failure to do so could jeopardise the ceasefire. There is anticipation that the talks will be fruitful with the ceasefire aimed at creating conditions conducive to an off ramp, said Chugh.
Elsewhere in Asia, Japan gained 1.8%. Taiwan and South Korea rose 1.6% and 1.4%, respectively. China and Hong Kong moved around half a percent higher.
At home, foreign portfolio investors (FPIs) bought shares worth a net ₹672 crore on Friday, the first time their trades have been in the positive since the West Asia conflict began. The last time they net bought Indian equities was February 25. The quantum of buying was relatively moderate compared with outflows worth ₹48,233 crore so far in April, but the reversal could come as a relief to the battered market The rebound softened the Volatility Index (VIX)-the street’s fear measure-which slid 7.8% lower to 18.9, indicating traders’ near-term risk expectations have eased. The gauge fell 26% this week, tracking the market recovery. “The technical structure is positive as Nifty has closed above 24,000 and the trajectory from 22,000 to 24,000 was underpinned by outperformance of the broader market,” said Ruchit Jain, head, technical research, Motilal Oswal Financial Services. The rally is expected to be sustained with the Nifty expected to move toward the 50 DMA (daily moving average) of 24,500, followed by 25,000 levels, he said. The Nifty Mid-cap 150 index and the Small-cap 250 index gained 1.6% each. During the week, both indices rallied 7.6% and 7%, respectively. Out of 4,449 shares traded on the BSE, 3,325 advanced and 986 declined. “The gains are expected to be sustainable since most of the negative news has been factored in, in the prices and sentiments,” said Chugh. “Almost 90% of corrections are likely to be done, and the index may be near the bottom.”