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Markets rise following a three-day drop, boosting investor wealth by Rs. 2.93 trillion

05 June 20234 mins read by Angel One
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An Overview

On Thursday, investors’ wealth increased by Rs. 2,93,054.25 crores as markets recovered from a three-day losing streak. The 30-share BSE benchmark Sensex rose 638.70 points, or 1.22 percent, to 52,837.21 at the closing. It rose 668.75 points to 52,867.26 over the day.

Following the optimistic trend, BSE-listed businesses’ market capitalization increased by Rs. 2,93,054.25 crores to Rs. 2,33,94,917.25 crores. Buying has returned to the Indian markets, bolstered by solid Q1 FY22 earnings and favourable global sentiments..

With a gain of 5.65 percent, Tech Mahindra led the 30-share pack, followed by Bajaj Finance, Bharti Airtel, Bajaj Finserv, Tata Steel, and L&T. Asian Paints, Bajaj Auto, and Mahindra & Mahindra were the biggest laggards, losing 2.27 percent.

The BSE midcap and smallcap indices surged up to 1.52% in the broader market. The BSE metal, telecom, capital goods, and industrials indices all rose by up to 3.02 percent, while the FMCG index fell. After trading subdued for the previous three sessions, markets rebounded sharply and gained more than a percent. Global markets were upbeat, resulting in a gap up start that grew stronger as the day continued.

Is a major correction on the cards for Indian stock markets?

The second pandemic wave slammed upon us like a tsunami. The good news is that it appeared to be ebbing almost as fast as it had risen. However, a big portion of the country has been under lockdown, which will undoubtedly have a negative impact on wages and economic growth. When you combine it with rising global commodity prices, which are stoking inflation fears, you have a strong mix.

Why are the markets growing in this manner, is the main question that comes to mind. Is there something we’re missing, or are the indices mispriced? Are we in for a rude awakening?

As earnings optimism surpasses pandemic fears, Asian markets rally

For the second day in a row, Asian stock markets rose alongside Wall Street, as optimism about an economic rebound appeared to outweigh concerns about mounting pandemic cases and inflation.

Investors are torn between optimism about a worldwide recovery and fear that it would be hampered by the virus’s more virulent delta variant’s spread. They’re also concerned that central bankers will be under pressure to rein in growing inflation by tightening lending.

In the short term, the delta variant represents a constant downside risk for markets, but it also keeps central bank hawks at bay as long as inflation remains a transitory problem.

On the New York Mercantile Exchange, benchmark U.S. crude percent fell 31 cents to $69.99 per barrel in electronic trading. On Wednesday, the contract rose $2.88 to $70.30. In London, Brent crude, which is used to price international oils, fell 35 cents to $71.88 a barrel. It rose $2.88 to $72.23 in the previous session.

The dollar USD JPY fell 0.18 percent to 110.14 yen from 110.28 yen on Wednesday.

Wrapping Up

So, while it is assumed that markets are in good form, and fairly reasonably so, the question remains as to what an investor should do.

Investors expect that markets will continue to be strong, providing plenty of profit chances in the next few years. However, selecting the right sectors and firms would be a sensible idea. Look for leadership, balance sheet strength, and all of the other fine characteristics in the companies you choose.

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