Sensex ends 483 points higher at 73,607, Nifty at 22,753, snapping a four-day losing run on metals, telecom

Vinod Nair of Geojit Investments said that mid-cap and small-cap shares recovered after a sharp correction in the previous week, but that investors remained selective. He pointed to earnings visibility and comfort on valuations as the factors that investors favoured.

The week behind it

The slide in the last week had been steady. On Thursday, 22 October, the Sensex fell 460 points and the Nifty ended at 22,688 as oil topped $110 and talk of higher interest rates returned. On Friday, it slipped another 125 points, with the Nifty at 22,600.

On Friday, the Sensex had closed at 73,123.83, down 125.56 points, or 0.17 per cent, and the Nifty had fallen 87.65 points, or 0.39 per cent, to 22,600. Those were the fourth losses in a row. The earlier part of the week had been marked by a surge in oil prices and tension in West Asia, which had weighed on sentiment, and foreign investors have pulled money out of Indian equities through October.

Brent crude fell 1.60 per cent on Monday to $114.8 a barrel, which eased some pressure, though prices remain high after settling at a six-month peak on Friday. A high oil price is a concern for India because it imports most of the oil it uses, and it feeds through to the rupee, inflation and company costs.

Global markets were mixed. Japan's and South Korea's indices closed lower, while Shanghai and Hong Kong's Hang Seng ended higher, and European markets were positive. US markets had closed lower on Friday. Investors were cautious ahead of the policy decisions of the US Federal Reserve, the European Central Bank and the Bank of Japan this week. Foreign institutional investors bought Rs 887.65 crore of equities on Friday, according to exchange data, which is a small positive after weeks of selling.

A single rise of 0.66 per cent does not change the trend. The market is being pulled in two directions: the domestic buyers and the earnings season on one side and high crude, a weak rupee and foreign selling on the other. The intraday range of about 1,090 points shows how nervous the market is. A day on which the index falls 600 points and then gains 480 is typically one on which buyers step in at lower levels, but it does not show that sellers have gone.

The market's breadth and the volume of trade were not reported, so it is hard to say how widely the gains were shared. Metal and pharma shares, which led, are often the first to attract buyers after a fall. The next things to watch are the central bank decisions, the movement of crude after the weekend's news from the Gulf, and the listing of Jio Platforms on 28 October, which could bring both fresh money and a wave of selling in other shares to fund purchases. Investors who follow monthly savings plans do not need to act on one day's move, but those who trade should expect more of the same swings. Foreign investors have taken Rs 48,056 crore out of Indian equities in October so far, and domestic institutions and monthly savings flows have absorbed much of it, which is the reason the index is where it is and not lower.