Hopes of EU stimulus cheer Indian markets (Roundup)

Mumbai, Jan 22 (IANS) Hopes of an additional stimulus package for the European Union (EU), coupled with stabilising crude oil prices and strengthening rupee, buoyed the Indian equity markets on Friday and led to a barometer index gaining 473 points.

Initially, both the bellwether indices opened on a positive note in sync with their Asian peers and Thursday’s late trading hour short-covering rally.

Moreover, the relief rally was supported by expectations of an additional stimulus from the ECB (European Central Bank) by March later this year.

Further, Chinese macro-data that pointed to stability in the Asian economy boosted sentiments.

Even the clarification from Chinese Vice President Li Yuanchao that the country has no plans to pursue a devaluation policy cheered investors.

Lately, the Chinese Yuan has been holding on a steady trajectory with positive liquidity coming in from the PBOC (People’s Bank of China).

In addition, stiffening of crude oil prices, which touched the $30-mark during the day’s trade, accelerated buying activity.

In the past week, global crude oil prices sank to $26-27 per barrel.

Besides, a strengthening rupee restored investors’ confidence. The rupee gained 49 paise at 67.63 to a US dollar from its previous close of 68.02 to a greenback.

“Exporters were seen to be aggressively selling dollars. Expectations of further reduction in policy rates has also helped receiving on dollar/rupee forwards,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.

“Overall the risk appetite may continue to offer support to rupee over the near term. We can see a range of 67.20-68.20 on spot.”

The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE), gained 473 points or 1.98 percent.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day’s trade in the green. It stood higher by 145.65 points or 2.00 percent to 7,422.45 points.

The S&P BSE Sensex, which opened at 24,122.06 points, closed at 24,435.66 points, up 473.45 points or 1.98 percent from the previous day’s close at 23,962.21 points.

The Sensex touched a high of 24,472.88 points and a low of 24,120.04 points in the intra-day trade.

The S&P BSE market breadth favoured the bulls — with 2,066 advances and only 607 declines.

“The rebound in global currencies, equities and oil prices buoyed the Indian equity markets. The rebound supported the buying activity,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

“The risk appetite has improved after several attempts to rise higher, this has loosened the bear’s grip on markets. There was also short-coverings.”

Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that markets rebounded sharply after the ECB hinted at further stimulus at its next meeting in March, which lead to a rally in global markets and crude.

“We expect to witness some profit booking early next week as selling pressure continues to remain high. Markets will also watch out for home sales data next week,” Agarwal predicted.

Nitasha Shankar, vice president for research with YES Securities, cited that Indian markets ended trade on a strong note closing above its previous day’s high after 14 trading sessions; suggesting a temporary pause in the corrective wave.

“Broader markets continued its outperformance for second day running as stock specific buying was seen,” Shankar noted.

“PSU (public sector undertakings) bank index gained five percent led by massive short covering. All sectorial indices ended in the green with outperformance coming from metal, bank, and auto stocks.”

The foreign institutional investors (FIIs) were net sellers during the day’s trade, while domestic institutional investors (DIIs) were net buyers.

According to data with stock exchanges, FIIs divested Rs.769.83 crore, while DIIs bought stocks worth Rs.915.60 crore.

Sector-wise, healthy buying was observed in stocks of automobile, banking, capital goods, metal and oil and gas. In contrast, telecom sector came under intense selling pressure.

The S&P BSE automobile index zoomed by 594.98 points, banking index augmented by 481.84 points, capital goods index swelled by 324.59 points, metal index gained by 275.57 points and oil and gas index edged higher by 260.09 points.

However, the S&P BSE telecom closed lower by 29.96 points.

Major Sensex gainers during Friday’s trade were Gail, up 7.99 percent at Rs.367.45; Maruti Suzuki, up 5.53 percent at Rs.4,107.35, Tata Steel, up 5.35 percent at Rs.247.10, State Bank of India (SBI), up 4.81 percent at Rs.184.30; and Dr.Reddy’s Lab, up 4.55 percent at Rs.2,883.15.

Major Sensex losers during the day’s trade were Bharti Airtel, down 3.41 percent at Rs.298.85; Hindustan Unilever, down 0.54 percent at Rs.772.65; Wipro, down 0.07 percent at Rs.550.30; and Infosys, down 0.05 percent at Rs.1,135.90.

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