Sensex, Nifty open higher after 8-week losing streak; banks lead rebound

Benchmark indices opened sharply higher on Monday, with the Sensex rising over 400 points, as banking and financial stocks led a rebound after the market's longest weekly losing streak in 25 years. Easing crude oil prices and expectations that the US Federal Reserve may not raise rates this month also supported sentiment.

The Sensex was at 72,322.08 at 9:22 am, up 412.38 points or 0.57%. The index opened at 72,340.95 and touched an early high of 72,402.27. The Nifty 50 was at 22,536.75 at 9:23 am, up 114.80 points or 0.51%. It opened at 22,532.40 and touched 22,564.60.

The rebound comes after both indices logged their eighth straight weekly decline last week. Persistent foreign selling, elevated crude prices and rising global bond yields had kept investors cautious in recent weeks.

BANKING, FINANCIAL STOCKS LEAD RALLY

Banking and financial stocks were among the biggest gainers in early trade, providing strong support to the benchmark indices. Bajaj Finance was the top Sensex gainer, rising 3.12%, while Bajaj Finserv gained 1.55%. SBI rose 1.46%, Axis Bank 1.38%, HDFC Bank 1.05% and ICICI Bank 0.44%.

The Nifty Financial Services 25/50 index rose 0.77%, while the private bank index gained 0.72% and PSU Bank index jumped 2.07%.

HDFC Bank was also in focus after the lender appointed Anup Bagchi as its next MD and CEO for a three-year term. Bagchi, currently MD and CEO of ICICI Prudential Life Insurance, will be the first external candidate to lead HDFC Bank.

Dr V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said the market could see a rebound after eight weeks of declines.

“After eight weeks of declines the market appears set for a rebound in the near-term. The better-than-expected results of Accenture and the appointment of Anup Bagchi as MD and CEO of HDFC Bank have the potential to lead a turnaround in the market,” Vijayakumar said.

He added that while elevated crude prices, high US bond yields and sustained FII selling remain headwinds, attractive valuations, particularly among large-caps, could limit further downside.

CRUDE OIL EASES

Oil prices also provided some relief to Indian equities. Brent crude was down 0.83% at $101.40 per barrel, while WTI crude fell 1.22% to $90 a barrel.

Lower oil prices are positive for India as they can ease pressure on inflation, the import bill and corporate margins. The market has remained highly sensitive to crude in recent weeks as prices above $100 had added to concerns around inflation and India's external finances.

Vijayakumar also pointed to the resilience of the domestic economy, citing September auto sales as a positive signal.

“September auto sales numbers are good, indicating a structurally resilient economy,” he said.

RBI RATE HIKE IN FOCUS

The Reserve Bank of India's Monetary Policy Committee meeting begins today, with the central bank's policy decision due on Wednesday.

Vijayakumar expects the RBI to raise rates by 25 basis points on October 7, although he said the market has already largely priced in the move.

“The RBI is most likely to raise rates by 25bp on 7th October. The market has already largely discounted this. Banks will benefit from the rate hike since rising floating rates will improve their margins,” he said.

BROADER MARKET ALSO RISES

The rebound was broad-based in early trade. The Nifty 100 gained 0.50%, Nifty 200 rose 0.53% and Nifty 500 advanced 0.53%. Midcaps also participated, with the Nifty Midcap 50 up 0.55%, Midcap 100 up 0.66% and Nifty Smallcap 100 up 0.69%.

Among sectors, PSU banks rose 2.07%, while metals gained 1.04%, oil and gas 1.03%, financial services ex-banks 1.05%, mid-small financial services 0.83% and mid-small IT and telecom 0.93%.

However, IT, pharma and healthcare stocks remained under pressure. Nifty IT fell 0.14%, pharma declined 0.76% and healthcare slipped 0.98%.

Foreign portfolio investors remained net sellers for the sixth consecutive session on Thursday, offloading equities worth Rs 9,484.22 crore, according to provisional NSE data. Domestic institutional investors bought shares worth Rs 10,041.84 crore.

The positive opening therefore marks a recovery attempt rather than a clear reversal in the market trend. Investors will track the RBI policy, crude prices, foreign flows and global bond yields for further direction.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)