Post weekly losses: Stocks make smart recovery, Sensex spurts 642 pts

Shares snapped their five-session losing streak and end with sharp gains on Friday. The Nifty rose 186.15 points (1.28%) to close at 14,744 while the Sensex rallied by 641.72 points (1.3%) to 49,858.24. Despite a smart rise, the markets posted loss on a weekly basis.

Stocks opened lower, but saw a surge in buying during the second half of the trading session. What triggered buying was US bond yields coming off their highs. Indian markets bucked the trend globally, which remained negative on rising Covid-19 cases and scare around inflation due to surging bond yields. The 10-year US Treasury yields rose to 1.75% late on Thursday, but somewhat cooled on Friday.

South Korea’s Kospi, Hong Kong’s Hang Seng and China’s Shanghai Composite closed down by 0.86%, 1.41%, and 1.69%, respectively. Europe saw a similar trend with the markets in Germany, France and the UK declining by 0.58% to 0.69%.

Market experts have warned of volatility going forward on rising Covid-19 cases at home and the surge in bond yields in the US. Rusmik Oza, head of fundamental research, Kotak Securities, said: “This week, the US 10-year bond yield spiked to 1.75%, which has led to volatility in global markets. In India, Covid-19 cases have been on the rise, but we have not seen similar increase in the number of deaths. This time even though the number of cases is going up, the impact on business and manufacturing activity is not much. Nonetheless, the Street would be concerned about resurfacing of cases and to that extent we could see profit booking at every rise in the very near future.”

The biggest gainers on the Nifty were Hindustan Unilever, NTPC, JSW Steel, UPL and Tata Steel with gains of 4.51%, 4.24%, 3.96%, 3.94% and 3.76%. The biggest losers were Tech Mahindra, Larsen and Toubro, Bajaj Auto, Coal India and Titan, down by 1.25%, 1%, 0.51%, 0.47%, and 0.35%.

Brokerages have said despite the volatility caused by US bond yields, the outperformance of value stocks continues. This, according to ICICI Securities, is because of a number of factors. “Value rotation is being triggered by cyclical reversion of a decadal underperformance to growth as valuation gap peaks amid a global bull rally, commodity upturn, government focus on capex, manufacturing (PLI schemes, tax cut, etc), disinvestment, general economic recovery and continuation of accommodative stance by major central banks,” it said.