Indian equity benchmarks reversed losses and ended with gains, extending their bull run into the fifth straight week, bucking a global sell-off in risk assets, a day after minutes from the Federal Reserve's July meeting pointed to rates staying higher for longer to bring down inflation.
Both the 30-share BSE Sensex index and the broader NSE Nifty index ended with marginal gains, right at the fag end of the trading session on Thursday.
The Sensex started the day sharply lower at 60,080.19 points and hit a low of 59,946.44 points, but ended at 60,298.00, a gain of 37.87 points, 0.06 per cent, compared to Wednesday's close. Nifty climbed 12.25 points, or 0.07 per cent, to 17,956.50.
From the Sensex pack, Kotak Mahindra Bank, Larsen & Toubro, Bharti Airtel, UltraTech Cement, Power Grid, IndusInd Bank, State Bank of India and ITC were among the gainers.
On the other hand, Dr Reddy's Laboratories, Wipro, Infosys, Mahindra & Mahindra, Axis Bank and Nestle were among the laggards.
Bharti Airtel surged 1.59 per cent to Rs 733.25 after it received the allocation of 5G spectrum.
"No Fuss, No Follow Up, No running around the corridors and No tall claims. This is ease of doing business at work in its full glory," said the Telecom Tycoon.
Kotak Bank surged 3.45 per cent to Rs 1904. L&T rose 2.09 per cent to Rs 1894.20. UltraTech Cement, IndusInd Bank, Power Grid Corporation, State Bank of India and ITC were among the major Sensex gainers.
Dr Reddy's Laboratories slumped 2.18 per cent to Rs 4225.55.
IT stocks witnessed heavy selling pressure. Wipro slipped 1.83 per cent to Rs 435. Infosys fell 1.50 per cent to Rs 1582.70. Tata Consultancy Services dipped 0.57 per cent to Rs 3381.25. HCL Technologies closed 0.65 per cent down at Rs 973.85.
Mahindra & Mahindra, Axis Bank, Nestle India, Titan and Sun Pharma were among the major Sensex losers. Half of the 30 scrips that are part of the benchmark Sensex closed in the red.
But both the benchmark bourses have recovered all of the losses they suffered in 2022 because of gains of nearly 11 per cent over the past four weeks, with Indian stocks posting their greatest week since February late last month.
The broader NSE Nifty 50 index hit over a four month high close in the previous session, and extended that winning streak to an eighth straight day.
The Sensex started the day sharply lower at 60,080.19 points and hit a low of 59,946.44 points. The Sensex briefly turned positive in the morning session hitting a high of 60,287.13 points.
"Fed minutes are weighing, but I think India will be an outlier, despite what happens globally," AK Prabhakar, head of research at IDBI Capital, told Reuters.
"As momentum builds, such news will not derail Indian markets. Something new has to come," Mr Prabhakar added.
Domestic stocks defied a broad global sell-off trend as strong capital inflows continued to boost Indian stocks.
Foreign institutional investors remained net buyers in the capital market on Wednesday as they purchased shares worth Rs 2,347.22 crore, according to the latest exchange data.
Stocks on Wall Street fell broadly for the first time since the start of this week as the Fed did not give a clear direction on in its July meeting minutes published on Wednesday.
Some policy-makers on the Federal Open Market Committee (FOMC) wanted rates to be retained at a "sufficiently restrictive level" for an appreciable period of time to stop inflation in its tracks.
Following Wall Street's declines, the largest MSCI index of Asia-Pacific stocks outside of Japan dropped 0.5 per cent, European equities fell as a Central Bank official there cautioned that the outlook had not improved.
In the last two months, stocks have made a significant comeback amid expectations that the rate of monetary tightening has reached a high. However, they are still vulnerable to central banker cautions that the battle against price pressures is far from over.
"After a very strong run for risk assets thanks to a narrative that we might have seen “peak inflation”, yesterday put a stop to that as multiple headlines came through that poured cold water on the prospect that central banks were about to let up on hiking rates," Deutsche Bank analysts, told Reuters.
The dollar climbed toward a three-week high. The pound dropped back below $1.20 while the euro dipped 0.1 per cent to $1.0168.
Though some investors found reason for cheer in the Federal Reserve's minutes, there's little conviction that the spectre of high inflation and interest rates to match will fade anytime soon.
That is keeping markets on edge and after the recent rally across risk assets, some fund managers are warning about the outlook.
"Investors need to hedge urgently - the environment which has led to this bear market rally, which we concede we did not see being as strong as it has been, is about to change," Mohammed Apabhai, Citigroup's head of Asia Pacific Trading Strategies, told Reuters.
"The Fed has seen monetary conditions loosening and is now set to continue with its tightening. In particular, it is now set to double the pace of quantitative tightening from the current $47.5 billion to $95 billion starting September 1."
The rupee weakened sharply to near 79.70 against the dollar on Thursday, tracking a broad sell-off in global risk assets even as domestic equities bucked the gloomy global trend.