Thursday started badly. Indian shares opened lower and struggled through the first hour. Then buyers came in steadily through the rest of the session.
As the market closed, the Sensex had risen 905.01 points, or 1.24%, to 74,151, ending a two-day losing streak. The Nifty 50 rose about 1% to 22,936, its highest close in about a week, after falling close to its 52-week low last week.
What changed? Not much in the news. The Fed’s decision to hold rates overnight was almost fully expected. Still, after weeks of worry about a possible Fed hike, oil near $116 and record foreign selling, a decision that did not make things worse was enough to bring buyers back.
Consumer and property stocks lead
FMCG and realty were the best-performing sectors, an unusual pair. Consumer goods stocks recovered after falling following Hindustan Unilever’s results on Wednesday. The market seems to have looked past HUL’s margin pressure and focused on its 7% volume growth, the strongest in more than four years, which suggests everyday consumer demand is stronger than many feared.
Property stocks also rose. The sector is very sensitive to interest rates, and a pause in US rate increases eases some of the pressure on the RBI to raise rates again. Realty shares had fallen sharply this month, which made them likely candidates for a rebound.
Adani Ports was one of the biggest gainers among large companies, rising about 6% after raising its full-year guidance on Wednesday. Jio Platforms, Power Grid and TCS also rose early in the session.
Will the rally last
Rallies like this have been common lately. The Sensex rose 483 points last Monday and then gave most of it back over the next two sessions. So far, the market has not managed to string together several gains in a row.
The factors holding the market back are still there. Brent crude is still above $110. The rupee ended Wednesday at 95.23 to the dollar, near its record low. Foreign investors have taken about ₹48,000 crore out of Indian shares this month. And the Fed’s decision only postponed the question of another increase: two officials wanted a hike this month, and markets expect one in December.
There is also the US midterm election on 3 November. President Trump has indicated that military action against Iran could follow, and a new strike would push oil higher almost immediately.
Smaller stocks keep rising
One positive trend in recent sessions has been the strength in small and mid-sized stocks. They have outperformed the main indices in each of the last few sessions, which suggests domestic investors are steadily buying the shares that fell most in October. Domestic funds, with record SIP inflows behind them, are providing support that foreign investors are not.
The results season continues. Coal India, Asian Paints, IndiGo, Trent, Ambuja Cements and Suzlon are among the companies reporting today and tonight. The October monthly vehicle sales figures, out on Sunday, will show how strong festive demand was. Diwali is on 8 November, ten days away.
For now, Thursday was a good day after a difficult month. Whether the gains last depends mostly on oil and the Gulf.
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