Biggest single-day rally of March adds Rs 3.5 lakh crore to investors’ kitty

The Indian markets staged a stellar performance on March 31, 2023, with the BSE Sensex climbing over 1,000 points on the final day of financial year 2022-23, taking investor wealth in a single day by Rs 3.5 lakh crore.

While the BSE Sensex jumped 1,031 points to 58,992, the Nifty50 spiked 279 points, or 1.63, percent to 17,360.

Positive mood in Asian counterparts, tracking the uptrend on Wall Street overnight, lifted market sentiments.

Broad-based rally

The information technology sector took the lead, with 2.5 percent gains, following the upside in tech stocks in Asia. Mphasis, Coforge, Infosys, LTIMindtree, HCL Technologies, Tech Mahindra, TCS, Wipro, and Persistent Systems gained between 1 percent and 4 percent, as their valuations look attractive after a recent sharp correction.

The IT index itself corrected more than 2,000 points after the banking crisis in the US and Europe in the last couple of days.

Among other sectors, banking, financial services, energy, industrials, utilities, capital goods and oil and gas indices gained 1-1.7 percent.

Given the upward movement in the market, investors turned richer by more than Rs 3.48 lakh crore in a single day, as the BSE market capitalisation increased from Rs 254.71 lakh crore to Rs 258.33 lakh crore.

If we added the uptrend of March 29, the total increase in investors’ wealth was more than Rs 6.25 lakh crore in two straight sessions.

“We expect a significant upside from here. If you ask me about what all negative factors are being priced in, I am in a position to write a book. On the flip side, there are no positives that are being priced into the markets, and this is when we know we are bottoming out,” Divam Sharma, Founder of Green Portfolio PMS, said.

In the recent past, the exodus of retail investors, the Adani debacle, recessionary fears, and the rapid rise of interest rates have dented the markets. The benchmark indices corrected more than 10 percent from their record high in December 2022, before a recovery in the last couple of days.

“FY23 has been a commotion, an emotional rollercoaster for retail investors, and a game of patience for institutional investors. This is how markets work, a period of stellar returns followed by consolidation. We are now looking forward to the next cycle,” Divam said.

The northward journey in the market continued for the second consecutive session, especially after consolidation in the previous 10 odd days. The benchmark indices traded within the broad range from March 15, during which time we have seen a clear breakout on March 31, with a healthy gap-up opening.

The Nifty50 has formed a strong bullish candlestick pattern on the daily charts.

Global scenario

On the global front, Asian peers, Japan’s Nikkei and South Korea’s Kospi gained nearly 1 percent each, while Australia’s ASX 200, Hong Kong’s Hang Seng and China’s Shanghai Composite traded 0.4-0.8 percent higher.

In India, now all attention will be on the Monetary Policy Committee meeting, scheduled to be held between March 3 and 5. Most experts expect the MPC to raise the repo rate by 25 bps to 6.75 percent from the earlier 6.5 percent.

Meanwhile, global brokerage firm Morgan Stanley has upgraded India to equal weight (EW), with narrowing valuation premiums and a resilient economy. Its equity strategists for the Asia-EM markets are particularly positive about the country’s financials and consumer-discretionary sectors.
They are bullish on India’s structural growth outlook, driven by digital infrastructure, the lending boom, demographics, domestic demand and improving FDI.

They believe that inflation in the country is peaking and, therefore, they expect a dovish move by the Reserve Bank of India (RBI) in April, seeing a rate hike of 25 bps. They also see the consumer price index (CPI) softening on lower oil prices. “The external macro environment is less challenging for India, given the potentially easing pressure from energy costs and a weaker US dollar,” they added.

Oil prices, the biggest expenditure and worry for the country, have been favourable since September last year. The international benchmark Brent crude futures traded below $100 a barrel for the last seven months. In the second half of this month, it dropped below $80 a barrel, which is quite supportive for India.

The broader markets also looked strong with the BSE Midcap and Smallcap indices rising 1 percent and 1.5 percent, respectively, as the breadth remained in favour of the bulls. About 2,500 shares advanced on the BSE, as 950 shares declined.

The number of stocks hitting the upper circuit (246) outnumbered those hitting the lower circuit (139).

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