Sensex Hits A Record High Of 62,528.38, Despite Global Gloom

Stock Market India: The Sensex index hits a record high of62,528.38 on Monday.

Sensex Hits A Record High Of 62,528.38, Despite Global Gloom

Stock Market India: Sensex hits a record high of 62,528.38

Indian equity benchmarks reversed losses from early in the session to surge on Monday, with the Sensex index scaling to a new record high.

That even as market sentiment dipped, driven by fears of global economic growth outlook after rare demonstrations against China's strict zero-Covid policy rattled investors.

After demonstrators and police battled in Shanghai on Sunday, concerns over the management of COVID-19 in the second-largest economy in the world caused Asian markets to fall.

While the 30-share BSE Sensex index initially fell on global gloom, it reversed course to gain 262.48 points, or 0.42 per cent, to hit a record high of 62,556.28, and rising. 

The NSE Nifty-50 index was up 66.40 points, or 0.36 per cent, at 18,579.85, after hitting a new all-time high of 18,614.25, breaching its intra-day previous best of 18604.45 in October last year.

"Markets could be seen trading lower in early trades Monday in view of weak Asian cues and resurgent safe-haven demand for the US dollar in the backdrop of China's increasing covid cases. Due to persisting lockdowns in the dragon country, demand has been slowing, resulting in recessionary fears in key global economies," said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.

"However, the positive takeaway is that the Covid concerns are offset by the optimism of more support from the Chinese central bank. While intra-day volatility would persist, some positive catalysts such as falling crude oil prices, US dollar index, and better than expected earnings season could keep the markets in good stead," he added.

That comes after both benchmarks had closed at a new record high for the second consecutive day and marked a fourth straight session of gains on Friday. 

The rise in domestic stocks was driven largely by solid capital inflows on expectations the US Federal Reserve will taper its pace of future rate hikes as early as next month, and inflation worries easing.

Foreign investors have bought Indian equities worth Rs 31,630 crore so far in November, according to data from NSDL.

"Foreign portfolio investors (FPIs) continue to be bullish on India markets compared to the other emerging and developed markets. The testimonial to this is the consistent buying trend seen since October 2022," Manoj Purohit, Partner and Leader - Financial Services Tax at BDO India, told ANI.

"The Indian equity market has managed to attract foreign investors, and the credit goes to the steady performance of the Indian economy despite the global headwinds of the ongoing military war, fluctuating fed rates and fear of recession knocking on the door," added Mr Purohit.

But the wider Asian market was weighed down by news from China. 

MSCI's index of Asia-Pacific shares outside Japan was down 0.6 per cent after US stocks ended Friday with mild losses. Chinese markets slid as protests erupted in several cities in the country.

Hong Kong shares fell 2 per cent, and the Shanghai Composite index was down 1 per cent.

The COVID spike and widespread discontent ended any short-term market optimism that China's economy was poised to reopen. Growth will continue to be hindered by the constraints, which appear to be around for a while.

A growing list of cities, including those with large populations, have imposed strong restrictions on movement because of a surge in infections; there will inevitably be a negative impact on economic activity from the restrictions on movement," wrote analysts at CBA.

"Even if China is on a path to eventually move away from its zero-COVID approach, the low level of vaccination among the elderly means the exit is likely to be slow and possibly disorderly. The economic impacts are unlikely to be small," added CBA analysts.

Concerns over Chinese economic growth also affected the trading of commodities in Asia.

Brent crude fell to $83 per barrel due to concerns that Covid restrictions could slow China's economic expansion.

US crude fell 0.25 per cent to $76.08 a barrel. A barrel of Brent crude dropped by 0.16 per cent to $83.48.

Last week, both benchmarks fell for a third straight week, reaching 10-month lows.

"Mobility data in China is showing the impact of a resurgence in COVID-19 cases," ANZ analysts wrote in a research note Monday. "This remains a headwind for oil demand that, combined with weakness in the US dollar, is creating a negative backdrop for oil prices."

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