Indian shares recoup some losses ahead of small-, mid-cap stress test results

BENGALURU: Indian shares rebounded on Thursday, recovering some of the losses from the previous session, led by a rally in energy stocks, as investors awaited the highly anticipated results of stress tests on certain mutual funds schemes.

The blue-chip NSE Nifty 50 index rose 0.68% to 22,146.65, while the BSE Sensex gained 0.46% to 73,097.28. They had lost 1.5% and 1.2%, respectively, in the previous session.

The broader, more domestically-focussed small- and mid-caps, climbed 3.45% and 2%, respectively, recouping some losses from Wednesday.

They have lost 11.4% and 5.8%, respectively, from their record highs on Feb. 8, compared to the 2% rise in Nifty.

Many market participants had attributed the broader market rally over much of 2023 and early 2024 to investors disregarding fundamentals. The country’s markets regulator on Monday, referred to it as froth.

“The intention of the Securities and Exchange Board of India is absolutely fair, but the timing and the market reaction were not helpful for sentiment,” said Deven Choksey, managing director of DRChoksey Finserv.

Financials, IT lead rise in Indian shares; small-, mid-caps underperform

Investors await stress test results of small- and mid-cap mutual funds, set to be disclosed by mutual fund managers from Friday, which will gauge the funds’ resilience to sudden redemption pressures.

“Despite the pressure on small- and mid-caps, availability of large-caps at compelling valuations and India’s macroeconomic strength will continue supporting the markets,” Choksey added.

Earlier in the day, rating agency Fitch raised its estimate for India’s economic growth for fiscal year 2024 and 2025, citing strong domestic demand.

Energy and IT indexes gained about 2% each, recovering from the previous session’s fall.

Adani group stocks, which tumbled on Wednesday, were the top Nifty 50 gainers. Adani Enterprises added 6.2%, while Adani Ports jumped 4.8%.

Larsen & Toubro jumped 2% on winning orders in the Middle East.