Sensex jumps 1,534 points as global tech sell-off sends money to India

Indian shares had their best day of the week on Thursday as investors pulled money out of richly valued technology stocks abroad and turned to India’s large companies. The rally was narrow, though: small and midcap shares fell.

The BSE Sensex closed 1,533.72 points, or 2.11%, higher at 74,315.61, more than making up Wednesday’s fall. The NSE Nifty 50 rose 374.65 points to 22,997.35, just short of the 23,000 mark it had crossed in the afternoon, when it touched 23,045.55.

Why the market rose

Worries about stretched valuations of artificial intelligence companies and higher US inflation set off a sell-off in technology-heavy markets overseas, which made Indian shares look relatively better value. At home, bond yields eased, the rupee held steady, crude oil prices softened and investors kept hoping the government might reconsider how equity gains are taxed.

Private banks led the gains, and IT and auto shares were also strong. Bharti Airtel rose 4% to ₹1,869, its best intraday gain in three months, after Reliance’s Jio set a date for its share sale. Tata Communications jumped more than 10% after its quarterly profit rose 86%.

YES Bank was the biggest casualty. Its shares fell as much as 20% after the Supreme Court upheld a 2023 Bombay High Court order that quashed the bank’s ₹8,415 crore write-off of AT-1 bonds in 2020.

A narrow rally

The broader market told a different story. The Nifty Midcap 100 slipped 0.36% and the Nifty Smallcap 100 fell 1.31%, and state-run banks were sold.

Vinod Nair, head of research at Geojit Investments, said the rally needed company results to back it up. “Near-term sustainability will therefore depend on Q2 earnings delivering on revenue and margins,” he said, pointing also to the need for wider participation, the return of foreign money and stable oil and currency markets.

Vatsal Bhuva, technical analyst at LKP Securities, said he was “treating the current move as a relief rally until the index reclaims its 50 DMA”, referring to the 50-day moving average. The Nifty has moved above its 20-day average but remains below its 50-day and 200-day averages. He put support at 22,800 and resistance at 23,200.

Rupee extends gains

The rupee rose for a fifth straight session and closed at 95.05 to the dollar. It opened at 94.91 and touched 94.85 in early trade.

Dealers credited the Reserve Bank’s recent steps to curb speculation against the currency, including a 20% reserve requirement for banks on dollar purchases above $2 million and a ban on rebooking cancelled rupee derivative contracts. Lower dollar demand from oil companies also helped. In the morning, Brent crude was down nearly 2% at $104.30 a barrel and the dollar index had eased to 101.99.

Wipro reported its September-quarter results on Thursday, and Tech Mahindra is also due to report.