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Journalism of Courage
After the 4.7 per cent crash on Thursday, stock markets on Friday rallied by three per cent in the opening session as the sharp turnaround on Wall Street following a series of tough sanctions by the US and other countries against Russia brought some relief among nervous investors.
The benchmark Sensex bounced back by 1,638 points to 56,168.38 and the NSE Nifty index rose 499 points to 16,746.70 at 10.45 am IST.
The recovery in Indian markets has been widespread with small-cap index rising 4.07 per cent and mid-cap 4.08 per cent. BSE metal index jumped 4.78 per cent, realty gained 4.75 per cent, power 3.67 per cent, banks 3.11 per cent and auto 3.13 per cent. RIL was trading with a gain of 1.65 per cent, Tata Motors 7.96 per cent, TCS 3.34 per cent, HUL and HDFC Bank 2.20 per cent.
However, analysts are not sure whether the rally will continue as oil is still above $100 per barrel, and the Russian invasion of Ukraine is continuing in full force.
There could be supply disruptions and commodity prices are slated to remain at an elevated level, said an analyst. “The recovery looks fragile. If the war gets prolonged, sentiment will be hit. The market is a minefield now. Indian markets are following the global trend,” he said.
After tanking over 2.6 per cent in early trade on Thursday, Wall Street staged a smart bounce-back with the S&P 500 rallying 1.5 per cent. Tech-heavy Nasdaq staged an even bigger comeback — Nasdaq composite swung from a 3.4 per cent loss in the morning to a 3.3 per cent gain by the end of the day. The Dow Jones Industrial Average rose a modest 92.07 points, or 0.3 per cent, to 33,223.83 rallying back from an earlier 859-point loss. With expectations fading for a bigger-than-usual increase in rates, stocks that tend to benefit the most from low interest rates led the way for indexes to cut their losses. The focus was on big tech stocks like Amazon, Microsoft and Nvidia which rose 4.5 per cent plus.
It was a remarkable turnaround after the Nasdaq was on track during the morning to close 20 per cent below its record high for the first time since the Covid pandemic collapsed the economy in 2020. Taking a cue, Asian markets — from Japan, Hong Kong to South Korea — also gained ground on Friday.
Wall Street made a noticeable rally after US President Joe Biden unveiled a series of sanctions against Russia and said more measures are on the way. The measures included moves against two Russian banks, cutting the country off from Western financing by targeting Moscow’s sovereign debt, and penalising oligarchs and their families who are part of Putin’s inner circle. That came after a series of announcements in Europe with Germany halting certification of the lucrative Nord Stream gas pipeline from Russia, while Britain targeted five banks and three billionaires. Canada, Japan, Australia and other countries have also followed up with their own sanctions. However, the sanctions are not directly aiming at Russia’s crude exports which could reduce the upward pressure on crude oil prices, analysts said.
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