Dubai: For a second day, India’s stock markets refused to be dragged down by what a US court said about the Adani Group, powering up with a 1,200 point gain for the BSE Sensex by 10.30am IST. The Sensex general index – which closed last Friday (November 22) with a 1,000 point spike - is running at 80,361 points.
By 02:00pm India time, the Sensex gains were clipped to just over 800 points to 79,903.
Indian expats in the UAE with sizeable exposures to the BSE and Nifty too are holding the line. They are ‘mostly reviewing their portfolios and looking for opportunities at this juncture’, said Krishnan Ramachandran, CEO of Barjeel Financial Services. “Even Indian mutual funds – in which UAE based Indian expats have exposures - have not seen much of a change since last Thursday”, which was when the US court dropped its bombshell against Adani Group.
“Indian stock markets are navigating a complex landscape - valuation concerns, foreign investment dynamics, and corporate earnings challenges. While short-term volatility persists, the underlying economic fundamentals suggest potential for recovery and growth in the medium to long term.”
Even Indian mutual funds – in which UAE based Indian expats have exposures - have not seen much of a change since last Thursday.
The Adani Group imbroglio
The US court said the Group, founded by Indian billionaire Gautam Adani, had paid bribes in the hundreds of millions of dollars to secure prestigious contracts from the Indian government. That day, Adani Group’s listed stocks on the BSE went into a freefall, and the wider BSE Sensex closed lower by 400 points. The fears were rife that the Adani crisis could drag all of the key sectors on the BSE down, notably banking and infrastructure.
The decline was ‘brutal’ on Thursday. All the listed Adani entities ended in the red, with losses between 7% to 22.61%.
But the next day, the mood had changed – significantly. “Investors were buoyed by the statement Adani Group issued in response to the US charges,” said an analyst. “Even select Adani stocks closed positive by end of Friday.”
I would still see this rally as a pure technical rebound as the markets complete a painful process of mean-reversion.
New week, new momentum for Sensex
Today, along with the general index, the mood around the Adani stocks too is trending positive.
“The Indian markets are seeing the technical rebound getting extended for a second day,” said Milan Vaishnav, founder and Technical Analyst, ChartWizard FZE.
“The Adani stocks are seeing a modest uptick, up between 0.75% to 2.45%.
“The Maharashtra state election results had a modest share in terms of the sentimental boost (last Friday and today). However, I would still see this rally as a pure technical rebound as the markets complete a painful process of mean-reversion.
“This happens when the indices run too far ahead of their curve and witness a counter-trend retracement.”
Will FPIs change course?
Foreign Portfolio Investors (FPIs) have been net sellers when it comes to Indian stocks in recent months, primarily 'influenced by global economic uncertainties and domestic valuation concerns', said Ramachandran. Between April to October, these funds withdrew around $33 billion from Indian equity. In comparison, domestic institutional investors have been net buyers - adding around $46 billion between April to October.
"This in fact arrested the market downturn in a substantive manner," said Ramachandran.
