Indian stocks gain after Ukraine tension-fueled selloff

A man wearing a protective mask walks past the Bombay Stock Exchange (BSE) building in Mumbai, India, March 13, 2020. REUTERS/Francis Mascarenhas

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BENGALURU, Feb 15 (Reuters) – Indian stocks rose on Tuesday after their worst day in 10 months, helped by gains in IT and consumer stocks, even as global markets remained jittery over escalating tensions between the Russia and Ukraine.

The NSE Nifty 50 Index (.NSEI) rose 0.40% to 16,909, as of 0457 GMT, while the S&P BSE Sensex (.BSESN) climbed 0.47% to 56,661.55. During the previous session, both indices had fallen by 3%.

Broader Asian stock markets were flat after U.S. and European stocks lost ground on Monday as investors considered the implications of a potential impending Russian invasion of Ukraine.

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“People are looking at all opportunities to get out of their leveraged positions,” said AK Prabhakar, head of research at IDBI Capital in Mumbai, while noting headwinds like geopolitical risks, rising oil prices crude oil and impending U.S. interest rate hikes.

“With the momentum lost, people are not making any more money. With the risk of rising interest rates and selling from foreign funds, investors want to get out of their leveraged positions.”

Stocks of fast-moving computer and consumer goods companies, which are defensive in nature, gained momentum in volatile markets. The Nifty IT Index (.NIFTYIT) rose 1.6% while the Nifty FMCG Index gained 1.2%.

Among individual stocks, drugmaker Cipla (CIPL.NS) fell 4.5% after its promoter group sold a 2.5% stake in the company, while Manappuram Finance (MNFL.NS) fell 4.5%. fell more than 10% due to lower quarterly earnings.

“Markets are currently not conducive to holding stocks, trading below their 50 and 200 day moving averages. It is better to protect capital by staying on the sidelines than to take risks,” they said. William O Neil India analysts said in a note.

Meanwhile, BofA Securities cut its December 2022 Nifty target to 17,000 from 19,100 and said the breadth of the market was likely to shrink and volatility could increase.

Indian corporate profits could structurally outpace nominal gross domestic growth, thanks to a confluence of multi-year investment, credit growth, start-up cycles and “growth-oriented” fiscal and monetary policies, analysts said. BofA.

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Reporting by Nallur Sethuraman in Bangalore; Editing by Subhranshu Sahu

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