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Stocks rise for third straight day amid falling commodity prices

By on June 27, 2022 0

The market rebound continued for the third consecutive day. Nifty and Sensex gave up some of the gains at the end of Monday’s session, but were still up 0.85% and 0.82% respectively. The fall in commodity prices continues to offer some respite and gives hope for a less hawkish attitude by central banks to control inflation. Some decline in crude prices is also positive for India, improving sentiment.

“Lower inflation expectations and the easing of covid-19 restrictions in China have lifted global commodities, helping to ease sentiment in global markets,” said Deepak Jasani, head of research on the retail, HDFC Securities Ltd. The market rally was led by IT stocks, which had Metals and capital goods also rebounded strongly.

Buoyancy in global markets boosted sentiment as bulls maintained momentum for the third session in a row, experts said. The Nikkei, Taiwan Taiex, Hang Seng and Shanghai Composite all ended with gains of 0.88% to 2.35%. Only the Jakarta Composite index closed down 0.38%.

Market experts, however, remain cautious until a full economic recovery is evident. The progress of the monsoon will also be crucial for the economy. “The drop in commodity prices has lifted the exhausted domestic stock market over the past few sessions,” said Vinod Nair, head of research at Geojit Financial Services. A strong market rally can only be expected when the economy stabilizes from these uncertainties and foreign institutional investors become net buyers, Nair said.

“The change in mood was a major relief. However, optimism could remain for a few more sessions before the market turns volatile amid concerns about the global economy slowing due to rate hikes and exits. foreign funds,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd. Foreign releases are a major concern for Nair and Chouhan. Foreign portfolio investors (REITs) were net sellers of stocks worth more than 2.15 trillion in 2022, through June 24 and there is no sign of a trend reversal soon, experts say.

The REIT selloff is putting pressure on the rupiah although some respite comes from cooling oil prices.

The Indian rupee hit a record low of 78.43 amid continued outflows of foreign funds, weaker macro data and fears of a downturn weighing on markets, said Sugandha Sachdeva, vice president, equity research. Commodities and Currencies, Religare Broking Ltd.

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