Sensex Rises Over 100 Points To Defy A Broader Global Stocks Slump

Indian equity benchmarks gained to defy a broader global stocks slump on Wednesday, stalling a three-session losing streak, even as risk sentiment remains affected by concerns that aggressive policy tightening would cause a worldwide economic downturn.

The BSE Sensex gained 179.53 points to 57,326.85 in early trade, and the broader NSE Nifty index rose 52.75 points to 17,036.30.

In the previous session, both benchmarks crashed 1.5 per cent in a deep fag-end sell-off.

Overnight, there was little good news to be had.

Oil prices fell for a third straight day as investors worried about the potential impact on fuel demand from rising recessionary threats and increasing COVID-19 restrictions in China.
US futures were mixed as the S&P declined for the sixth straight session, and the Nasdaq 100 hit a new two-year low.

Led by technology firms, Hong Kong shares were on track to reach their lowest level in a decade, and Chinese stocks also fell to a six-month low. Following the central bank’s reversal of excessive interest rate rises, South Korea’s benchmark index decreased.

The International Monetary Fund cut its global growth outlook for 2023 to 2.7 per cent from an earlier projection of 2.9 per cent and warned that pressures from inflation, war-related food and energy shortages, and rising interest rates might cause a global recession and unstable financial markets.

Bloomberg reported that Kristina Hooper, Chief Global Market Strategist at Invesco, said in a note that while the world economy is slowing after rate hikes, there is yet to be a meaningful decline in inflation.
“This is an extraordinary monetary policy tightening environment, and we are waiting to see if something breaks globally,” she said. “The UK has come close.”

The Bank of England warned investors and pension funds in the UK that it would stop its massive bond-buying programme on Friday, which was intended to calm the recent wild swings in the pound’s value and gilts.

Following those remarks from BoE Governor Andrew Bailey, markets remain uneasy.

Stocks on Wall Street plunged due to those warnings, which came ahead of US inflation data that is predicted to confirm the Fed’s resolve for an aggressive tighter policy.

The third quarter earnings season for US banks begins this week, and strategists are preparing for lacklustre profits in the face of a barrage of warnings about the growing likelihood of a worldwide recession.