The benchmark Indian stock traded in the green on Wednesday to extend the gains accumulated on the previous day's trading session. The Sensex and the Nifty are half a per cent higher from Tuesday's closing.
Sensex and Nifty rallied nearly one per cent on Tuesday after gains in sectors like financials, auto and IT shares to recover the losses incurred on Monday due to the Israel-Hamas war.
The IMF has raised India's growth projection too supported the stock indices. IMF raised the projections to 6.3 per cent this fiscal year, 20 basis points higher than what had been estimated in its previous report (100 basis points equals one percentage point). The IMF had attributed a stronger-than-expected consumption in India during the April-June period for the upward projection in the growth estimate.
The IMF has raised India's growth outlook for the second time since April from 5.9 per cent in April to 6.1 per cent in July, and 6.3 per cent now, taking it closer to the 6.5 per cent predicted by the country itself.
The monetary policy committee of the Reserve Bank of India (RBI) had decided to keep the repo rate unchanged at 6.5 per cent, to maintain the status quo for the fourth straight occasion, during its review meeting earlier in October. This lent some stability to the domestic financial markets.
VK Vijayakumar, the chief investment strategist at Geojit Financial Services was quoted by ANI as saying, "It is important to appreciate the fact that even in the midst of the West Asian crisis, markets are resilient, globally. The fundamental support to the market comes from the resilience of the US economy, the declining US bond yields and the hope that the Israel-Hamas conflict will remain a localised crisis which will not impact crude prices."
Vijayakumar, however, is of the opinion that investors should remain cautious as the situation is taking a turn for the worse and that cannot be ruled out.
All eyes will be on Tata Consultancy Services for fresh cues on Wednesday as it kicks off the domestic Q2 earnings season. The Federal Reserve policy minutes from its September meeting will also be monitored for any hints on its future course of action.