Mumbai: Indian shares recovered modestly on Friday after two consecutive sessions of losses, with technology stocks leading the gains as investors responded to strong results from US chipmaker Nvidia. However, caution remained in the market after sharp volatility during Thursday's closing auction and ahead of Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole economic symposium.
At 9:25 a.m. local time, the Sensex was up 249.88 points, or 0.32 percent, at 77,188.48. The Nifty 50 had gained 53.15 points, or 0.22 percent, to 24,145.35. Later in the morning, the Sensex was at 77,216.23 and the Nifty was at 24,144.90.
The gains were led by information technology stocks. The Nifty IT index rose about 3 percent, with all its 10 constituents gaining, after Nvidia's strong results and outlook lifted technology shares in global markets.
The recovery followed a difficult session on Thursday, when Indian benchmark indices fell for a second consecutive day. The Sensex closed at 76,933.59, down 539.35 points, or 0.70 percent. The Nifty 50 ended at 24,090.85, down 116.90 points, or 0.48 percent.
Both indices had fallen about 1 percent over the previous two sessions and were heading for a third consecutive weekly decline.
Thursday's trading was particularly volatile during the new Closing Auction Session on the Bombay Stock Exchange. The indicative value of the Sensex briefly fell by more than 3 percent during the closing auction before recovering part of the decline.
The sharp movement occurred on the first monthly derivatives expiry since the Closing Auction Session was introduced. The unusual swings raised concerns among traders about liquidity and price discovery during the final part of the trading day.
The Closing Auction Session applies to eligible stocks and follows the end of regular trading at 3:15 p.m. The closing auction process continues until 3:35 p.m. and is designed to determine the official closing price through an auction based process.
The Securities and Exchange Board of India, or SEBI, has said it is not planning immediate changes to the system. SEBI Chairman Tuhin Kanta Pandey said the mechanism would continue and indicated that participation could increase as brokers and investors became more familiar with the new process.
However, the available evidence does not establish that the new auction mechanism alone caused Thursday's sharp movement. The volatility occurred during the auction period, but other market and derivatives related factors were also involved.
Global factors are also influencing Indian markets. Higher oil prices and US Treasury yields have weighed on global risk sentiment in recent sessions. Higher US yields can also make emerging market assets less attractive to international investors.
Oil prices remained an important concern for India on Friday, although crude prices eased below the $90 a barrel level. India is a major importer of crude oil, making movements in global oil prices important for its economy and financial markets.
Investors are also closely watching Kevin Warsh's speech at the annual economic symposium in Jackson Hole, Wyoming. The Federal Reserve has scheduled Warsh's keynote remarks for Friday as investors seek greater clarity on the US economic and monetary policy outlook.
Warsh's comments could influence expectations about the future direction of US interest rates. Changes in those expectations can affect bond yields, currency markets and investment flows into emerging markets such as India.
Foreign investor activity has provided a mixed picture. Foreign investors sold Indian shares worth about 2.98 billion rupees on Thursday, according to provisional data. However, they had bought about 3.15 billion dollars worth of Indian shares so far in August, putting the month on course to be their strongest monthly buying period since September 2024.
The market is therefore beginning Friday on a firmer note, but the recovery remains cautious. Investors will now watch Warsh's remarks for clues about US monetary policy and whether the strength in Indian technology stocks can spread to the wider market.