Sensex Rises Over 200 Points On Robust US Company Earnings, But Risks Persist

Indian stock indices rose on Thursday on robust earnings from US technology companies, but an energy crisis in Europe and China's lengthy lockdowns kept the mood cautious, propelling the dollar close to two-decade highs as investors seek out safety and yield.

The 30-share BSE Sensex 30-share index rose over 200 points to about 57,025, and the broader NSE Nifty was up above 17,100. Both the benchmarks slipped nearly 1 per cent in the previous session.

On Tuesday, the Sensex had jumped nearly 800 points to around 57,356, while the Nifty had risen almost 1.5 per cent to about 17,200, after both the indexes had declined over 1 per cent on Monday.

That volatility was expected to continue on fears of global economic growth, the Russia-Ukraine conflict and a demand slowdown in China because of surging cases. 

Asian stocks rose, with the MSCI's broadest index of Asia-Pacific shares outside Japan up 0.5 per cent, led by a 1 per cent bounce in Australian stocks from Wednesday's one-month trough.

"The real question is, whether this really matters for a durable turnaround in otherwise fraught global circumstances," Vishnu Varathan, head of economics at Mizuho Bank in Singapore, told Reuters.

"Volatility is still high .. .even if not outright fear, the trepidation is hard to miss with on-going uncertainty from the war in Ukraine, which continues to threaten with more widespread economic pain," he added.

On Wednesday, Russia's decision to halt gas supplies to Bulgaria and Poland sent tremors through European energy markets and whacked global financial markets.

That has added to the sour mood amongst investors already reeling from China's COVID surge and renewed stringent restrictions.

The flight-to-safety trades helped the dollar index to a five-year high of 103.28, and a further push above 103.82 would see it to levels not visited since late 2002.

"With COVID lockdown fears in China exaggerating upside risks for the dollar, we recognise the possibility of a stronger-for-longer dollar," Jane Foley, Head of FX Strategy at Rabobank, told Reuters.

Among domestic shares, Nifty's FMCG index rose 0.8 per cent, driven by a 2.5 per cent jump in Hindustan Unilever after the firm's quarterly profit rose and beat analysts' estimates.

Shares of Reliance Industries rose 0.7 per cent to hover near record highs after the conglomerate said an investment company set up by Rupert Murdoch's son James and former Disney India executive Uday Shankar would invest Rs 13,500 crore in Reliance's broadcasting business Viacom18.

Unilever Limited, Sun Pharma, Asian Paints, Infosys, Power Grid, Dr Reddy's and M&M were among the early gainers in the Sensex pack.

In contrast, the laggards were HCL Technologies, Bharti Airtel, HDFC Bank, ICICI Bank, TCS, and Bajaj Finance.

According to the latest stock exchange data, foreign institutional investors (FIIs) continued to be net sellers, offloading shares worth Rs 4,064.54 crore on Wednesday.

"A clear trend in markets now, in developed markets and India, is the preference for value stocks over high-priced growth stocks," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, told PTI.

"This is partly a reflection of risk aversion among investors in the present context of mounting challenges posed by the expected aggressive tightening by the US Fed and the uncertainties arising from the Ukraine war that is getting prolonged," he added.