Bank Nifty Provides The Much Needed Support

Significant recoveries in the real estate and power sectors, a turnaround in the direction of Adani Group stocks and relief from the banking sector gains contributed to the trimming of losses in domestic indices

As the majority of global indices tumbled, mirroring the weakness on Wall Street, Indian headline indices also suffered a bloodbath in the first week of the fortnight. Wall Street had its worst session of the year with all the major indices plunging more than 2 per cent as recessionary worries reappeared and long-term predictions of higher interest rates intensified. Following the decline in global technology equities, domestic IT stocks were undoubtedly the most severely impacted. The BSE Information Technology index recorded the worst performance, losing 4.56 per cent.

Shares of Vedanta Ltd. and Hindalco Industries Ltd. fell sharply after reporting a steep decline in net earnings, causing significant losses in the metals sector. Due to heavy selling pressure, the power, utilities and real estate sectors bore the brunt of the damage. Even so, thanks to a robust rebound in the second week of the fortnight, these sectors emerged as the best performers of the period. Adani Group stocks, specifically those in the power sector, such as Adani Power, Adani Transmission and Adani Green Energy, which had previously been severely damaged as a result of the Adani-Hindenburg conflict, started to experience a significant buying interest with back-to-back upper circuits. 

Despite falling more than 5 per cent in the first week of the fortnight, BSE Realty emerged as the top-gaining sector with gains of 2.74 per cent thanks to a significant rally that enabled it to soar more than 8 per cent in just five trading sessions. The rally was led by over 40 per cent robust gains in Macrotech Developers Ltd. (Lodha), while Oberoi Realty Ltd. and DLF Ltd. also made notable contributions. BSE Bankex was one of the gaining sectors, headed by shares of State Bank of India, which soared more than 5 per cent in the last trading session of the fortnight.

This was on account of the announcement that the bank had raised USD 1 billion through a syndicated social loan from global banks for additional lending. With relief from strong gains in the banking sector, mostly due to State Bank of India, the BSE Sensex trimmed some of its earlier losses, ending the fortnight 1.45 per cent lower, while the Nifty 50 index lost 1.40 per cent. Even though outperforming the main indices, the BSE Mid-Cap index and BSE Small-Cap index closed 0.24 per cent and 0.56 per cent lower, respectively. 

According to data issued by the Ministry of Statistics and Programme Implementation, India’s gross domestic product (GDP) growth rate has fallen for the second consecutive quarter in October-December, coming in at 4.4 per cent. The core sector, on the other hand, recorded a growth of 7.8 per cent in January as opposed to a growth of 7 per cent in December. Surprisingly, both domestic institutional investors (DIIs) and foreign institutional investors (FIIs) became net buyers. In the last 15 days, the FII inflow was recorded at ₹2,909.89 crore while DII inflow was recorded at ₹15,768.51 crore.