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Snapping a 7-day losing streak, Indian equity benchmarks ended with strong gains on Friday, as investors cheered the RBI MPC announcement of the repo rate hike. Key gauges opened with minor cuts as traders were concerned as the RBI said India’s current account deficit (CAD) in April-June was at $23.9 billion, or 2.8 per cent of gross domestic product (GDP), much higher than the $13.4 billion, or 1.5 per cent of GDP, in January-March 2022. Besides, foreign institutional investors sold a net Rs 35.99 billion ($441.7 million) worth of equities on Thursday, as per provisional data available with the National Stock Exchange. However, key indices turned green and witnessed strong momentum in morning deals, after the Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) announced a 50 basis points (bps) hike in the repo rate to 5.90 per cent on Friday in order to bring elevated inflation back to its target. Sentiments remained up-beat with S&P Global Ratings’ statement that rising rates and increased European energy insecurity are hitting growth in almost every country, but India with an estimated 7.3 per cent growth this fiscal, would be the star among emerging market economies. 

Traders also found support with Union Minister Piyush Goyal’s statement that India will be the pillar of the global economic revival as it exhibited steady growth and emerged as the fastest-growing country among large economies of the world. Some optimism also came as Economic Affairs Secretary Ajay Seth said India’s economic recovery remains on course, supported by key structural reforms, despite exogenous shocks and challenges. Adding to the optimism, India climbed six notches to 40th position in the Global Innovation Index 2022 on account of improvement in several parameters. According to a report by the Geneva-based World Intellectual Property Organization (WIPO), Switzerland, the United States, Sweden, the United Kingdom and the Netherlands are the world's most-innovative economies. Traders also took a note of report that the Centre has reduced its borrowing target for the financial year 2022-23 (FY23) by Rs 10,000 crore to Rs 14.21 trillion amid robust tax collections. 

On the global front, European markets were trading higher as government bond yields pulled back from recent highs and new data showed the U.K. economy has not yet fallen into a recession. U.K. GDP for the second quarter of this year has been revised upwards to show growth of 0.2 percent from the previous estimate of a contraction of 0.1 percent. Asian markets settled mostly lower on Friday with growing worries about the U.K.'s fiscal policy, Europe's energy crisis and hawkish Fed commentary weighing on markets. Chinese manufacturing data proved to be a mixed bag, with the official PMI bouncing back to the expansion territory in September, while the Caixin PMI marked a second straight month of contraction.

Back home, auto stocks were in focus as the government deferred until October 2023 the implementation of norms mandating six airbags in all cars, giving the industry a one-year extension. Gems and jewelry industry stocks were in focus as ICRA Ratings expects India’s exports of cut and polished diamonds (CPDs) to taper by 8-10% to $22.0-22.5 billion in FY2023, amid the demand moderation.

Finally, the BSE Sensex rose 1016.96 points or 1.80% to 57,426.92 and the CNX Nifty was up by 276.25 points or 1.64% to 17,094.35.

The BSE Sensex touched high and low of 57,722.63 and 56,147.23, respectively. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.39%, while Small cap index was up by 1.45%.

The top gaining sectoral indices on the BSE were Telecom up by 3.49%, Metal up by 2.66%, Bankex up by 2.63%, Financial Services up by 2.36% and Consumer Durables up by 1.96%, while Oil & Gas down by 0.01% was the lone losing index on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.49%, Indusind Bank up by 3.78%, Bajaj Finance up by 3.28%, Kotak Mahindra Bank up by 3.22% and Titan Company up by 2.95%. On the flip side, Asian Paints down by 1.26%, Dr. Reddy's Lab down by 0.58%, ITC down by 0.32%, Tech Mahindra down by 0.23% and Hindustan Unilever down by 0.18% were the top losers.

Meanwhile, expressing optimism over India’s economic status, Union Minister Piyush Goyal said the country will be the pillar of the global economic revival as it exhibited steady growth and emerged as the fastest-growing country among large economies of the world. He said if all stakeholders of the economy work together with a sense of 'Kartavya bhav' (spirit of duty), the national goal of $30-trillion economy will be achieved by 2047, the year when the country will celebrate 100th anniversary of its independence. He added that India is already the fifth largest economy in the world and is turbocharging its growth to become the third largest in the coming years. He claimed all sectors such as agriculture, manufacturing and construction are doing quite well.

Asserting that India is the best destination for investments, Goyal said the government has taken several structural reforms, and more are in the pipeline. He also urged industrialists for private investments and asked them to believe in India's growth story and help the country in achieving its goals with greater participation. He appealed to industrialists to help India become a global base for manufacturing and invest in tier II and tier III cities, which hold ‘immense potential’.

He stressed on the promotion of micro, small and medium enterprises by strengthening the local supply network as the sector is a job creator and a major contributor to the economy. He also called for more dialogue with the government and active participation in the FTA (free trade agreement) negotiations. He stated that the 5G rollout in the telecom services across the country will contribute $450 billion to the economy in the next 15 years. The minister also mentioned that India is taking leadership roles on global platforms.

The CNX Nifty traded in a range of 17,187.10 and 16,747.70. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 5.58%, Bharti Airtel up by 4.57%, Indusind Bank up by 4.01%, Bajaj Finance up by 3.31% and Bajaj Finserv up by 3.25%. On the flip side, Adani Enterprises down by 0.88%, Dr. Reddy's Lab down by 0.82%, Cipla down by 0.52%, Coal India down by 0.49% and Apollo Hospitals Enterprise down by 0.40% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 26.07 points or 0.38% to 6,907.66, France’s CAC increased 39.42 points or 0.69% to 5,716.29 and Germany’s DAX increased 36.00 points or 0.3% to 12,011.55.

Asian markets settled mostly lower on Friday as Wall Street shares suffered heavy losses overnight on heightened fears of a recession. Growing worries about the United Kingdom's fiscal policy, Europe's energy crisis, hawkish Federal Reserve commentary and the prospect of bigger rate hikes have also weighing on markets. Chinese shares fell, despite the official Chinese PMI showed that the country’s manufacturing sector unexpectedly expanded in September. Japanese shares declined even as Japan's Prime Minister Kishida Fumio planned to spend nearly 7 billion dollars over five years in an economic stimulus package to be announced next week. Data showed that Japan's industrial production and retail sales figures for August beat expectations, and the jobless rate fell to 2.5% in the month. South Korea's factory output contracted for a second month in August, but retail sales jumped 4.3%, marking the fastest gain since May 2020.

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