Indices mark biggest one-day gain in 6 months

Mumbai: The upswing in Indian equities continued on Wednesday, with benchmark indices posting their biggest single-day gain in six months, as concerns over the Omicron variant of the coronavirus ebbed and the Reserve Bank of India (RBI) maintained a more dovish tone in its policy than what the market had expected. Analysts said the market could run up further, with the Nifty moving past its hurdle of 17,400. The Nifty ended 293 points, or 1.7%, up at 17,469.75. The Sensex closed 1,016.03 points, or 1.76%, higher at 58,649.68.

"There is a good chance that the Nifty will climb to 17,700-17,800 and will regain its bullish trend," said Siddarth Bhamre, director, alternative investments and research, InCred Equities.

European markets edged higher on news that a third dose of the Covid-19 vaccine produced by Pfizer and German partner BioNTech could fend off the Omicron variant. US stocks too rose but gave up a portion of their early gains. At home, the perception of risk in the market abated further, with the Volatility Index (VIX) declining 6.5% to 17.27.

Big Gains for Bajaj Finance, Other Lenders
The easing of concern over the Omicron variant has helped markets over the past two days, said Andrew Holland, chief executive, Avendus Capital Alternate Strategies. "The RBI policy was in line with expectations, so it did not move the market much higher. It was already gaining due to easing of concerns around the new variant," he said.

Shares of lenders such as Bajaj Finance and State Bank of India led market gains on Wednesday, with the Nifty Bank index gaining 1.8% to 37,285 after RBI kept rates unchanged.

While this was along expected lines, Nomura said the central bank remained steadfastly focused on growth and did not give any signals on policy normalisation, prompting traders to cover a bulk of their bearish bets on bank stocks.

Bajaj Finance was the biggest gainer on Sensex, ending 3.7% up, while Maruti Suzuki India, SBI, Bajaj Finserv and Asian Paints advanced 2.6-3.5%. Kotak Mahindra Bank and Power Grid Corporation of India were the only two laggards on the index.

With the gains of the past two days, benchmark indices are down nearly 6% from record highs, as against 8% earlier. Though the nervousness in the market has eased, analysts expect some profit booking around 17,600 levels on the Nifty, as traders would be wary about the likelihood of a spike in Omicron cases. Still, any downside is likely to be limited.

"When the market corrects with less volume and bouncebacks are strong, it indicates the market will not go down significantly," said Bhamre of InCred Equities.