Indian equity benchmarks ended Wednesday with marginal gains on a rebound in foreign inflows, even as global stocks slipped and the dollar firmed as investors' mood darkened, hurt by poor economic data from around the world.
The 30-share BSE Sensex index reversed earlier losses to close with minor gains the NSE Nifty index closed 27.45 points, or 0.16 per cent, higher at 17,604.95 points.
Gains in power, banking and financial stocks were offset by the losses in IT, auto and metal stocks.
IndusInd Bank surged 2.90 per cent to Rs 1102. NTPC jumped 1.29 per cent to Rs 160.40. ICICI Bank rose 1.08 per cent to Rs 874.
L&T, Power Grid Corporation, Kotak Bank, HDFC, Asian Paints, Axis Bank, Nestle India and Tech Mahindra were among the major Sensex gainers.
After nose-diving on Monday and earlier in the previous session, the Sensex index recovered to gain 257.43 points, or 0.44 per cent, to close on Tuesday at 59,031.30, and the Nifty rose 86.70 points, or 0.5 per cent, to 17,577.50.
Tata Steel slipped 0.93 per cent to Rs 106.55. TCS fell 0.86 per cent to Rs 3255.35. Titan slipped 0.80 per cent to Rs 2460.35.
The index heavyweight Reliance Industries Limited closed 0.32 per cent down at Rs 2639.05.
Maruti Suzuki slipped 0.34 per cent to Rs 8691.80 after it announced plans to recall vehicles to fix defects in Airbags.
“Caution prevailed in the market ahead of monthly expiry on Thursday, while key benchmark indices eked out modest gains and shrugged off weak sentiment across most of Asian and European markets," Shrikant Chouhan, Head of Equity Research for Retail at Kotak Securities.
"Gains were muted as investors preferred to stay on the sidelines ahead of the Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole symposium this Friday," he added.
Domestic stocks bucked a broad global stocks weakness as foreign inflows into Indian equities this month have reached over $5 billion. In contrast, the first half of the year had outflows of $28 billion.
"The steady buying by FIIs even in the midst of strengthening the dollar is significant from the market perspective. There is a near consensus now that India will be an outperformer in the deteriorating global growth environment," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, told ANI.
"So, FII inflows will be more country-specific rather than emerging market-oriented," Mr Vijayakumar added.
Foreign Institutional Investors (FIIs) were net buyers in the Indian capital market on Tuesday as they purchased shares worth ₹ 563.00 crore, according to the latest exchange data.
Data-wise, Wednesday was relatively quiet, but weak economic activity reports from Japan, the euro zone, and the US have been hurting demand for riskier assets like equities. The euro zone reported a contraction for a second consecutive month.
The STOXX 600, an indicator of all European markets, hit a four-week low and was last down 0.2 per cent, while the FTSE in Britain was down 0.9 per cent, continuing the day's early weakness in Asian shares.
S&P00 futures in the US fell 0.3 per cent.
Investors shift their focus to the Jackson Hole Symposium of central bankers, which starts on Thursday, with Friday's Fed chief Jerome Powell's statements of special interest.
Recent market moves were due to "the combination of the Fed and central banks sticking with their inflation mandate, and at the same time the latest economic indicators showing signs of weakness not just in Europe, but also in the US and also in Japan," Tai Hui, chief market strategist for Asia at JPMorgan Asset Management, told Reuters.
The tripling of European benchmark gas prices in just over two months hasn't helped either.
"Maybe two or three weeks ago, markets were thinking the Fed may be done with hiking rates by the end of this year and cutting rates in 2023, and that sequence of events now doesn't look like it's happening," Mr Hui said, noting this had pushed the yield on US benchmark 10-year treasuries back above 3 per cent early in this week.
The Fed Funds Rate is expected to reach its high sometime in the middle of 2023, according to current pricing, the expectations for which traders have been increasing.
The weak comparative outlook in other regions of the world has helped the US dollar, which has garnered support from increasing interest rate expectations.
Meanwhile, property stocks slumped in China as earnings served as yet another reminder of the serious predicament that developers are in due to a lack of simple access to funding. An indicator of listed builders in Hong Kong hit a 10-year low.
"People are still trying to understand the full extent of the detrimental effects as it has multiple repercussions," Samuel Siew, a market specialist at CGS-CIMB in Singapore, told Reuters.
"It's still very hard to actually measure the entire severity of the situation. That is what markets are trying to decipher, and whether ongoing support is sufficient."
Oil gained back the initial losses. With speculation of Saudi supply restrictions remaining in play, Brent crude prices increased 0.7 per cent to $100.9 per barrel. American crude futures increased 1 per cent to $94.75.
Gold's spot price remained at $1,747 per ounce, while Bitcoin, which was parked at $21,300, still had the wounds from a sharp decline at the end of the previous week.