Short-covering buoys Indian equity markets (Roundup)

Mumbai, March 30 (IANS) Short-covering ahead of derivatives expiry, coupled with lessened chances of a US rate hike and a recent economic reform buoyed the Indian equity markets on Wednesday.

Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed the day’s trade with healthy gains.

The Sensex, which opened at 25,062.06 points, closed at 25,338.58 points — up 438.12 points or 1.76 percent from the previous day’s close at 24,900.46 points.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day’s trade in the positive territory. It edged higher by 138.20 points or 1.82 percent, at 7,735.20 points.

During the intra-day trade, the Sensex touched a high of 25,358.84 points and a low of 25,055.42 points.

The BSE market breadth favoured the bulls – with 1,859 advances and 773 declines.

The barometer index had dipped by 66 points or 0.26 percent on Tuesday.

Initially, both the key indices of the Indian equity markets opened on a positive note, in-sync with their Asian peers, especially the Chinese indices and a firm close of the US exchanges on Tuesday.

Market observers cited that short-covering ahead of the derivatives expiry and increased chances of a rate cut by the Reserve Bank of India (RBI) supported prices.

Investors expect the RBI to cut key lending rates on the back of the union budget’s fiscal prudence measures, reduction in small savings interest rates and low inflation.

The RBI will conduct its first bi-monthly monetary policy review for 2016-17 on April 5.

In addition, Tuesday’s economic reform measure to allow 100 percent foreign capital in e-commerce with some riders cheered investors.

The move is expected to benefit not just foreign multi-brand retail entities like Amazon and e-Bay, but also single-brand overseas chains like Adidas, Ikea and Nike.

Besides, dovish comments from the US Federal Reserve chairman Janet Yellen on Tuesday indicated lessened chances of a US rate hike.

A hike in the US interest rates would have led away Foreign Portfolio Investors (FPIs) from emerging markets such as India.

Further, an appreciating rupee boosted investors’ sentiments. The rupee strengthened by 16 paise at 66.37-38 to a US dollar from its previous close of 66.54 to a greenback.

“Dovish comments from US Fed chairman Janet Yellen have lessened chances of a US rate hike. This acted as a positive cue for the equity markets,” Anand James, chief market strategist, Geojit BNP Paribas Financial Services, told IANS.

“Besides, short covering ahead of the derivatives expiry and increased chances of a rate cut by the RBI supported prices and restored investors’ risk taking appetite.”

Vaibhav Agarwal, vice president and research head at Angel Broking, pointed out: “Bank Nifty traded sharply higher after Vijay Mallya submitted a repayment plan of Rs.4,000 crore to the Supreme Court. Steel stocks also traded higher led by the extension of the safeguard duty.”

Agarwal expects the markets to shift focus towards the monetary policy and 4Q (fourth quarter) earnings expectations after the F&O (futures and options) expiry.

Nitasha Shankar, senior vice president for research with YES Securities said that the Indian markets closed on a positive note, following two days of corrections.

“Broader markets outperformed the headline indices as fresh buying in the high beta stocks were witnessed,” Shankar noted.

“All major sectorial indices ended in the green. PSU bank, metal, reality, pharma, energy and auto indices witnessed handsome buying.”

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

The data with stock exchanges showed that FIIs invested Rs.1,442.47 crore, while the DIIs sold stocks worth Rs.396.90 crore.

Sector-wise, healthy buying was witnessed in banking, capital goods, healthcare, automobile and metal stocks, whereas scrip of telecom companies came under selling pressure.

The S&P BSE banking index augmented by 557.43 points, followed by the capital goods index, which zoomed by 342.63 points; the healthcare index increased by 294.10 points; the automobile index gained by 271.67 points; and the metal index rose by 225.85 points.

The S&P BSE telecom index fell by 1.64 points.

Major Sensex gainers during Wednesday’s trade were Tata Steel, up 6.75 percent at Rs.324.40; ICICI, up 6.31 percent at Rs.237.45; Lupin, up 5.21 percent at Rs.1,474.50; Tata Motors, up 4.32 percent at Rs.388.90; and State Bank of India (SBI), up 4.25 percent at Rs.197.55.

Major Sensex losers during the day’s trade were HDFC, down 1.08 percent at Rs.1,115.55; Mahindra and Mahindra, down 0.98 percent at Rs.1,220.20; Bharti Airtel, down 0.20 percent at Rs.353.90; and Maruti Suzuki, down 0.08 percent at Rs.3,728.

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