Stock market rebounds: Nifty ends 3% higher on easing of geopolitical tensions

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The Indian benchmark indices made a sharp rebound on Tuesday, after easing geopolitical ttensions between Russia and Ukraine. Nifty 50 gained over 500 points and closed above 17,350, while the SENSEX recovered 1736 points from its previous day closing to end at 58,142 on Tuesday. Except for ONGC and Cipla, all the Nifty 50 stocks closed in green. 

After making a gap up opening, Nifty went to a downfall and lost around 100 points in the first hour of today’s intraday session. The index, however, took support from intraday’s low and added points throughout the day. 

Top Performing Sectors

Today’s shine in the Indian market was led majorly by banking and auto stocks. Nifty Bank gained 3.42% and made a strong closing above 38,000. The RBL Bank and SBI were the top performers, both registering a rise of over 5%. HDFC Bank also witnessed a healthy comeback and recuperated the lost 1500 level. Among the auto stocks, Tata Motors and Eicher Motors were the top gainers of the day. Furthermore, stocks like LIC Housing Finance, Delta Corp, and Zee Entertainment rose by over 7% each.

The broader market indices also made a healthy recovery. The Nifty Midcap 100 and the Nifty Smallcap 100 gained 2.86% and 2.51% respectively. The Nifty 200 and Nifty 500 also gave sterling performance by gaining 2.92% and 2.81% respectively. The NSE Advance/Decline ratio also gave a commendable figure, with 1332 stocks ending in green against only 568 stocks that closed in red.

Reasons Behind Market Rise

The recovery of the Indian market from yesterday’s bloodbath was supported by the de-escalation of the tense situation between Russia and Ukraine. The Russian troop started returning after a major build-up near Ukraine’s border. This was taken very positively by the investors as they see the same as the easing of the tussle between Russia and the West. The positive market sentiment helped investors grow their wealth by Rs 5.4 lakh crores in a single day. 

The positive sentiment resulting from de-escalating tensions between Russia and Ukraine was further assisted by the sudden and sharp decline in crude oil prices. The effect of positive global cues was also seen in the European markets that recovered much of the previous day’s losses. The American market, however, remained mute as the Nasdaq ended flat. The American market is still waiting for a positive domestic cue from the Fed in order to rise again. 

As far as the Indian market is concerned, investors welcomed a number of positive news from different industries. The first buoyant came from the IT industry, which as per Nasscom will surpass $200 Billion revenue this fiscal year. The Nifty IT index gained over 3% and all the IT stocks ended green today. Another news came from the aviation industry where SpiceJet returned to profit again by recording a net profit of Rs 42.5 crores. The company’s revenue jumped 33% surpassing the analysts’ estimates for the quarter. 

What should you do now?

  • Invest in equities in a staggered manner. 
  • Keep your SIP’s running. Stick to large caps and index stocks that are best suited to navigate the ongoing volatility 
  • INDmoney’s ROBO STP can help you invest in these volatile markets
  • Invest only high-quality AAA-rated bonds as they have the least risk.
  • There is a significant tax advantage in holding a debt fund for more than 3 years. 
  • For a more than 3-year investment horizon, an investor should prefer short duration (duration < 3) fixed income instruments over a long duration. Stick to short duration funds and bonds, as yields are expected to remain volatile in the near future. Further, in the medium-term (2-3 years) the rate cycle is expected to bottom out and move up.
  • Avoid lump sum allocation and adopt a more staggered approach over the next few months.
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