Indices surge to 3-week highs on global cues

The BSE Sensex ended at 58,960.60, up 549.62 points, or 0.94%, from the previous close. The Nifty gained 175.15 points, or 1.01%, to end the day at 17,486.95.

Elsewhere in Asia, most major indices rose 1-2%, while key averages in Europe were up 0.2-0.9%. In the US, the Dow Jones Industrial Average, the S&P 500 and Nasdaq Composite was up around 0.9% at the time of going to press.

At home, the Nifty crossed a key hurdle of 17,400, while the Volatility Index or VIX-a fear gauge-dropped, suggesting traders see lower risks of a downside to the market in the near term.

“Last week, India VIX cooled off below 18.5, leading to ‘buy on dips’ in indices as well as stocks,” said Sudeep Shah, head, technical and derivatives research, SBICAP Securities.

FPI Selling Moderates in Oct

“The positive cues from the global markets have taken Nifty towards 17,400 levels, which acts as a strong resistance level,” Shah said.

VIX ended at 17.45 on Tuesday, down 5.24% from the previous close.

Foreign portfolio investors (FPIs) were net sellers to the tune of Rs 153.4 crore on Tuesday, showed provisional stock exchange data. Domestic institutions purchased shares worth Rs 2,084.71 crore.

Foreign selling so far in October has moderated to around Rs 8,300 crore against Rs 19,000 crore of net outflows in the last 10 days of September, triggered by another 75 basis point hike in key policy rates by the US Federal Reserve and geopolitical tensions.

“A large quantum of hot money that came to the Indian markets around the time of the pandemic has flown out,” said Rakesh Arora, managing partner, Go India Advisors. “It does not mean foreign investors will stop selling now or in the coming months, but we see the selling pressure easing. This will provide some time for the Indian rupee to consolidate vis-a-vis the dollar.”