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Indian equity benchmarks made a strong comeback to recover the previous day's losses on Wednesday and ended with gains of around two percent, amid broad-based gains, led by Realty, Metal and Basic Materials stocks. After a gap up opening, indices showed strength throughout the session, as traders took encouragement with the Ministry of Finance’s statement that the Indian economy is well prepared to handle any capital outflows caused by external shocks. In its Monthly Economic Review report released the finance ministry's Department of Economic Affairs said India has adequate foreign exchange reserves to absorb the risks posed by the uncertain geopolitical environment. Some support also came as Minister of State for Finance Bhagwat Karad stating that banks have effected an aggregate recovery of Rs 7.34 lakh crore, in non-performing assets and written-off loan accounts, including those reported as fraud during the past six financial years and the first six months of the current financial year (FY22).

Key indices extended gains in the last hour of trade, as sentiments were further supported by the cool-off in the oil prices, and the progress on the peace talk between Russia and Ukraine conflict. Some optimism also came with Automotive Component Manufacturers Association of India's (ACMA's) President Sunjay J Kapur stated that the approval granted by the government to 75 auto component manufacturers for incentives under the production-linked incentive (PLI) scheme will act as a catalyst in the transformational journey from a conventional industry to a mobility industry. Traders took note of report that the government said it is keeping a close watch on evolving geopolitical developments and would make calibrated interventions to keep fuel prices under control to safeguard the interest of the common man. Meanwhile, Finance Minister Nirmala Sitharaman has said that Rs 53,661 crore of Goods and Services Tax (GST) compensation for the current fiscal (FY22) is yet to be released to the states. This include Rs 11,563 crore to be released to Maharashtra, Rs 6,954 crore to Uttar Pradesh, Rs 6,733 crore to Tamil Nadu, Rs 5,461 crore to Delhi and Rs 4,292 crore to West Bengal.

On the flip side, Asian markets ended higher on Wednesday, European markets were trading higher after a senior Chinese official said Beijing would provide more support for the slowing economy. Underlying sentiment was also supported by a retreat in commodity prices and hopes for a possible diplomatic solution to end the war in Ukraine. Investors also awaited a widely anticipated rate decision by the U.S. Federal Reserve later in the day amid the Russia-Ukraine crisis. The U.S. central bank likely to raise its key short-term rate by 0.25 percentage points, marking the first increase since 2018. Back home, there was some reaction in select banking stocks with report that no public sector bank (PSB) has faced any loss in the April-December period of the current fiscal year, and clocked a collective net profit of Rs 48,874 crore during this period. Auto stocks were in limelight with a private report that major automotive (auto) component manufacturers and automakers were shortlisted by the government for incentives under the production-linked incentive (PLI) scheme for the sector.

Finally, the BSE Sensex rose 1039.80 points or 1.86% to 56,816.65 and the CNX Nifty was up by 312.35 points or 1.87% to 16,975.35.    

The BSE Sensex touched high and low of 56,860.89 and 56,389.26, respectively. There were 28 stocks advancing against 2 stocks declining on the index.  

The broader indices ended in green; the BSE Mid cap index rose 1.80%, while Small cap index was up by 1.47%.

The top gaining sectoral indices on the BSE were Realty up by 3.66%, Metal up by 2.56%, Basic Materials up by 2.55%, Oil & Gas up by 2.18% and Consumer Durables up by 2.13%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Ultratech Cement up by 4.69%, Axis Bank up by 3.65%, Indusind Bank up by 3.60%, HDFC up by 2.92% and Infosys up by 2.69%. On the flip side, Sun Pharma down by 0.35% and Power Grid Corporation down by 0.07% were the top losers.

Meanwhile, the Finance Ministry in its Monthly Economic Review report has said that the Indian economy is well prepared to absorb any upcoming external shock in terms of capital outflow induced by an uncertain geo-political environment, however inflation remains a concern. The report said India has adequate forex reserves to absorb any upcoming external shock. As per the report, ‘Notwithstanding global developments, India’s forex reserves also stood at record high and large enough to finance more than 12 months of import’. It said despite the challenges, India’s external sector exhibits signs of resilience with robust growth in merchandise exports, which increased to $374.8 billion during April 2021 - February 2022. However it warned that high energy and commodity prices may pose upside risk to the inflation outlook in the near- medium term.

The report said ‘Recent increase in prices of food and energy commodities and metals warrants continued vigil on the inflation front’. It added that ‘The sustained rise in Capex is expected to pump prime private investment and demand. This is evident from capacity utilisation recovering to 68.3 per cent in Q2:2021-22, as compared to 60.0 per cent in the previous quarter’. Capital expenditure increased by 22.0 per cent YoY during April 2021-January 2022 and stood at Rs. 4.4 lakh crore in April-January 2021-22 compared to Rs. 3.6 lakh crore in the corresponding period last year.

It said despite global geopolitical headwinds, recovering consumption demand has catalyzed a healthy investment scenario in the economy. The second Advance Estimates of GDP for 2021-22 has projected consumption to surpass the level in the pre-pandemic year of 2019-20. On the high oil prices, it said ‘Recent sharp increase in the price of crude oil, if sustained well into the new financial year, will pose downside risk to these growth estimates’. It added ‘Given the inherently unsustainable nature of high prices, international commodity prices are expected to level off early with an increase in supplies outside the crisis zone’.

The CNX Nifty traded in a range of 16,987.90 and 16,837.85. There were 47 stocks advancing against 3 stocks declining on the index.  

The top gainers on Nifty were Ultratech Cement up by 4.63%, Axis Bank up by 3.55%, Bajaj Auto up by 3.35%, Indusind Bank up by 3.27% and Shree Cement up by 3.03%. On the flip side, Cipla down by 1.34%, Sun Pharma down by 0.44%, Tata Consumer Product down by 0.12% were the top losers. 

European markets were trading higher; UK’s FTSE 100 increased 76.79 points or 1.07% to 7,252.49, France’s CAC increased 217.95 points or 3.43% to 6,572.95 and Germany’s DAX increased 442.83 points or 3.18% to 14,360.10.

Asian markets ended higher on Wednesday following a senior Chinese official said Beijing would provide more support for the slowing economy. Further, Sentiments were also supported by a retreat in commodity prices and hopes for a possible diplomatic solution to end the war in Ukraine. Ukrainian President said that the positions of Ukraine and Russia at peace talks were sounding more realistic but more time was needed.  Meanwhile, Investors also awaited a widely anticipated rate decision by the U.S. Federal Reserve later in the day amid the Russia-Ukraine crisis. The U.S. central bank likely to raise its key short-term rate by 0.25 percentage points, marking the first increase since 2018. South Korea's Kospi average gained snapping a three-day losing streak as traders tracked the latest geopolitical developments. Electronics, chemical and automobile companies topped the gainers list.

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