A retreat of bears lifted stocks. Is that enough?
₹5.9 trillion, a record high. The previous such record was ₹5.49 trillion on 4 June, when the Bharatiya Janata Party's failure to win a simple majority in the Lok Sabha elections spooked investors. Bond yields plunged and stocks rose across markets after Wednesday's soothing words from the Bank of Japan, with the Nifty gaining 1.27% to close above the 24,000 mark at 24297.5, while the Sensex rallied 1.11% to 79,468.01.
Fear gauge India Vix closed 13.72% lower at 16.17. However, BoJ's intent on higher rates, worries over the US economy and war clouds over the Middle East continue to trouble investors. The calm has been restored for the very near term, market experts said, warning that any blow-up in the Middle East could undermine a sustained recovery.
“Record high negative options bets created on Tuesday meant that a sliver of good news would result in a bout of short-covering," said Rohit Srivastava, founder, IndiaCharts. “This is what exactly happened with BoJ’s dovish comments on rate hikes on Wednesday." On Wednesday, foreign institutional investors (FIIs) sold a provisional ₹3,314.76 crore of shares, while domestic institutions net purchased ₹3,801.21crore. On 31 July, BoJ had raised its short-term policy rate to 0.25%, only the second hike in 17 years, sending the Nikkei crashing 12.4% on Monday.
Fears of an unwinding yen carry trade whipped stocks worldwide, worsened by worries of a hard landing in the US. The Nifty tanked 4% from a closing record high of 25010.9 on 1 August to 23992.6 on Tuesday. This culminated in option sellers writing or selling more calls than puts on Tuesday, a bearish sign.
Read more on livemint.com
