Markets recover sharply to close higher, but still end down for the week amid FII selling

Sensex ended 599 points or 0.8 per cent higher at 73,088.33 level

sensex nifty climb Shutterstock - 1

Domestic equity markets staged a sharp turnaround on Friday, reversing early losses to end higher. The benchmark BSE Sensex and NSE Nifty50 opened lower in the morning amid escalating tensions between Israel and Iran. But, they recovered after reports that Israeli missiles had struck Iran turned out to be incorrect. 

The Sensex swung almost 1,400 points from the day's low (71,816.46) and high point (73,210.17). Eventually, the Sensex ended 599 points or 0.8 per cent higher at 73,088.33 level. Similarly, the Nifty 50 saw a swing of over 400 points through the day. It closed up 151 points or 0.7 per cent at 22,147 level.

"Despite global weakness, Indian markets staged a strong recovery driven by large-cap stocks buoyed by the expectation of limited prospects of escalation following Israel's actions against Iran," said Vinod Nair, head of research at Geojit Financial Services.

Reports on Friday morning had indicated that Israeli missiles and drones had struck near the Iranian city of Isfahan. Later, Reuters reported there were a small number of explosions that resulted from Iran's air defences hitting three drones and that Iran had no plans to respond against Israel. The International Atomic Energy Agency also confirmed that Iran's nuclear facilities were safe, calming nervous investors. 

In the domestic market, short-covering also came into play as markets bounced back after a four-day losing streak, noted Prashanth Tapse, senior vice-president (research) at Mehta Equities.  

Banking stocks were among the major gainers on Friday. HDFC Bank, which will announce earnings for the fourth quarter on Saturday, closed 2.5 per cent higher. Among other lenders, ICICI Bank, IndusInd Bank, State Bank of India and Axis Bank were up 0.5-1..0 per cent. 

Bajaj Finance, Bajaj Finserv, Mahindra & Mahindra, Maruti Suzuki, Bharti Airtel, Tata Steel, JSW Steel, Titan, ITC, Hindustan Unilever and Reliance were among the other major gainers. 

Software exporters Wipro and Tech Mahindra also gained 1-2 per cent. However, Infosys, which projected a weak revenue outlook for 2024-25 ended 0.6 per cent lower. Tata Consultancy Services and HCL Technologies also closed in the red. 

"Despite recording the highest-ever deal TCV (total contract value) in FY2024, the company has given out a muted revenue guidance to the tune of 1-3 per cent year-on-year constant currency. We believe, the conversion challenges continue to persist in FY2025 on account of slowdown in discretionary spends and delay in decision-making, which might lead to further pausing or deferring programs that are non-critical to business enterprises," said Pritesh Thakkar, research analyst at Prabhudas Lilladher. 

Despite Friday's gains, the Sensex and Nifty ended 1.6 per cent lower for the week as foreign institutional investors remained risk averse worried over the geopolitical tensions and fading hopes of early interest rate cut by the Federal Reserve due to high US inflation. So far in April, foreign portfolio investors have pulled out Rs 5,254 crore from India's equity market, data from NSDL showed. 

The geopolitical tensions in West Asia have also driven up oil prices, with brent crude trading above $90 a barrel. High oil prices pose risks of rising inflation in India.  

"Fragility persists with elevated oil prices posing inflation risks. Global sentiment remains subdued due to a robust US economy and persistent inflation, dampening hopes of a near-term Fed rate cut," said Nair. 

Meanwhile, the Rs 18,000 crore follow-on public offer of telecom company Vodafone Idea was subscribed 0.47 times (47 per cent) as of 4.30 pm on Friday. While the qualified institutional buyers portion was subscribed 92 per cent, retail individual investors portion was subscribed only 12 per cent. The issue closes for subscription on Monday.

In international markets, major Asian indices like the Nikkei 225 in Tokyo, Hong Kong's Hang Seng index and the Shanghai Composite Index ended sharply lower on Friday. European markets were also trading weak, with the FTSE 100 in London, France's CAC40 and the DAX index in Germany down 0.4-0.7 per cent


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