Glitch to rich: Markets zoom on banking stocks, proposed US tax (Roundup)

A rally in banking stocks along with expectations of healthy foreign fund inflows accelerated the rise in India’s stock market indices on Wednesday, even as a major index remained inoperable due to a technical glitch for the better part of the day’s trade.

Accordingly, the Centre’s moves allowing private banks to service government accounts triggered the rally which was further supported by hopes of healthy foreign inflows as speculations rose on a proposed US tax on capital gains.

Notably, the up move came despite the trade at the NSE being halted for close to four hours after a glitch resulted in unavailability of rates.

To pare the loss of time suffered by traders markets extended the trading hours till 5 p.m.

Consequently, the S&P BSE Sensex gained by 1,030.28 points or 2.07 per cent to 50,781.69 points from the previous close of 49,751.41. It opened at 49,763.94 and touched an intra-day high of 50,817.10 and a low of 49,648.78 points.

The NSE Nifty50 on the National Stock Exchange closed at 14,982, higher by 274.20 points or 1.86 per cent from its previous close.

The BSE trading session was extended as the trading in NSE resumed at 3.45 p.m. till 5 p.m.

After opening flat, the Nifty50 rose in early trade, however, the NSE shut trading in its cash and derivative segments at 11.40 a.m., citing “issues” with telecom links which it said impacted the system and stopped prices from being updated.

Trading resumed on the NSE at 3.45 p.m. and indices rose sharply post the second opening due to squaring-off activities across exchanges.

Among sectors, banks, media, metals and realty indices gained the most.

Globally, shares fell Wednesday in Asia as investors weighed the possibility that inflation might prompt central banks to adjust their ultra-low interest rate policies.

However, European shares opened generally flat to higher on Wednesday after Fed Chair Jerome Powell pushed back against inflation fears.

“Although this rise is to be seen in the backdrop of the widespread weakness across Asia, the momentum in the indices could take the Nifty up to 15039-15132 band in the near term,” Deepak Jasani- Head of Retail Research at HDFC Securities.

“However for the time being it seems as a correction of the recent fall and not a new uptrend.”

According to Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services: “Banking stocks led to the rally after government’s announcement on participation of the private sector. This sentiment was supported by the proposal for capital gains tax in the US.”

“However, the rise could have been a bit higher if the technical glitch in the NSE would not have occurred. The outlook has drastically improved.”

In addition, Vinod Nair, Head of Research at Geojit Financial Services said: “Technical glitch did not impact domestic market sentiment though volatility was high with a positive prejudice, in the first session. During the extra session, the market gathered more strength and hugely outperforming the global peers, triggered by squaring-off F&O positions a day ahead of the prefixed monthly expiry date.”

“The global market was mixed, not very convinced that world central banks like the US Fed will maintain a flexible monetary policy even during rising bond yield and inflation. And the Asian market was negatively impacted by a hike in stamp duty on equities.”