Sensex jumps about 700 points, riding higher on a global optimism waveIndian equity benchmarks jumped on Thursday, riding higher on investor optimism driven mainly by a rally on Wall Street tracking robust US company earnings, but global economic growth fears, a slowdown in demand from China’s stringent restrictions, and Europe’s energy crisis persist.In what has been an extremely volatile week, the 30-share BSE Sensex index rose about 700 points to about 57,521, and the broader NSE Nifty gained 1.2 per cent to 17,245, after having fallen nearly 1 per cent in the previous session.On Tuesday, the Sensex had jumped nearly 800 points to around 57,356, while the Nifty had risen almost 1.5 per cent to about 17,200, after both the indexes had declined over 1 per cent on Monday.”The real question is, whether this (the rise in stocks today) really matters for a durable turnaround in otherwise fraught global circumstances,” Vishnu Varathan, head of economics at Mizuho Bank in Singapore, told Reuters.”Volatility is still high .. .even if not outright fear, the trepidation is hard to miss with on-going uncertainty from the war in Ukraine, which continues to threaten with more widespread economic pain,” he added.That volatility was expected to continue in the near term as surging inflation has set major central banks on an aggressive tightening path, which has driven global economic growth risks, and as the Russia-Ukraine conflict shows no signs of abating anytime soon.Russia’s decision to halt gas supplies to Bulgaria and Poland sent tremors through European energy markets and whacked global financial markets. That has added to the sour mood amongst investors already reeling from China’s COVID surge and renewed stringent restrictions.The flight-to-safety trades helped the dollar index, which measures the greenback’s performance against six of its major peers, to a five-year high of 103.28, and a further push above 103.82 would see it to levels not visited since late 2002.”With COVID lockdown fears in China exaggerating upside risks for the dollar, we recognise the possibility of a stronger-for-longer dollar,” Jane Foley, Head of FX Strategy at Rabobank, told Reuters.In addition, persistent capital outflows have weighed on domestic stocks. According to the latest stock exchange data, foreign institutional investors (FIIs) continued to be net sellers, offloading shares worth Rs 4,064.54 crore on Wednesday.
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