Indian equity benchmarks rose on Monday as softening US 10-year Treasury bond yield, and China’s modest economic growth target eased concerns about inflation and rate hikes. Gains in Adani Group stocks also boosted the overall sentiment.
The BSE Sensex ended the session at 60,224, with a gain of 415 points, or 0.7 per cent. The index is now up 1,315 points, or 2.23 per cent in two trading sessions and has reclaimed the 60,000-mark after February 21, 2023. The Nifty50 ended the session at 17,711, with a gain of 117 points, or 0.6 per cent.
Global markets also rose amid the softening in the US bond yield to 3.91 per cent. Last week, the 10-year yield breached 4 per cent for the first time in four months, stoking fears that interests will stay higher for longer. It also led to speculations about the Federal Reserve (Fed) peak policy rate of 5.5 per cent to 6 per cent.
Investors are trying to gauge whether the yield would decline further.
Meanwhile, China’s less ambitious growth targets eased concerns about the reopening of the world’s second-largest economy contributing to the spike in inflation.
China set an economic growth target of 5 per cent for the year while refraining from any big stimulus measures. Missing the growth targets last year had made the Chinese leadership circumspect. The problems in China’s real estate market and the Covid-19 restrictions had hit the demand from China.
China’s muted growth outlook may be a blessing for central bankers who are trying to battle inflation which is not easing, despite rate hikes.
“Global stock markets were steady on Monday as investors assessed the impact of China’s decision to set the lowest economic growth target in decades for 2023,” said Deepak Jasani, head of retail research, HDFC Securities.
Apart from rising yields, strong US job and consumption data, and inflation data from Europe had fuelled speculation of higher-than-priced peak rates by major central banks. The statements by US Fed officials in the recent weeks — of keeping rates elevated till achieving a 2 per cent inflation target — had further fuelled fears.
“The relief rally continued for the second straight session, backed by a sharp upsurge in energy stocks like power, oil & gas that helped the benchmark Sensex end above the psychological mark of 60,000. There is some amount of bargain buying seen after the recent sell-off but the overall sentiment still remains that of caution with a negative bias, as larger worries related to macroeconomic woes and geo-political tension still pose a significant threat to markets,” said Shrikant Chouhan, head of equity research (Retail), Kotak Securities.
Going ahead, investors will be tracking Fed Chair Jerome Powell’s testimony to lawmakers for further cues.
The market breadth on Monday was strong with 2,099 stocks advancing and 1,470 declining. Four-fifths of Sensex constituents gained. Infosys stock was up 1.8 per cent and contributed most to Sensex gains.