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Lessened chances of a US rate hike buoys equity markets

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  19 Feb 2016 12:00 AM GMT

Mumbai, Feb 18: Lessened chances of a US rate hike, coupled with short-covering and value-buying swelled the Indian equity markets on Thursday.

The markets rose for the second consecutive day on the back of positive global indices, stiffening crude oil prices and inflows from foreign funds.

Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed the day’s trade up 267 points or 1.14 percent.

Similarly, the wider 50-scrip Nifty of the tiol Stock Exchange (NSE) ended the day’s trade in the positive territory. It was higher by 83.30 points or 1.17 percent at 7,191.75 points.

The Sensex, which opened at 23,536.47 points, closed at 23,649.22 points — up 267.35 points or 1.14 percent from the previous day’s close at 23,381.87 points.

During the intra-day trade, the Sensex touched a high of 23,735.35 points and a low of 23,448.21 points.

The BSE market breadth favoured the bulls — with 1,401 advances and 1,072 declines.

Initially, both the indices of the Indian equity markets opened on a firm note in-sync with their Asian peers and Wednesday’s healthy rise in the US markets.

Besides, a rise in crude oil prices, which climbed to over $30 a barrel (one barrel is equal to 159 litres), led investors to chase stock prices higher.

Notwithstanding the rise, caution-selling and profit-bookings on the back of volatility and a weak rupee dragged the markets lower. Investors’ confidence was also eroded by the continuing conflict between the ruling NDA (tiol Democratic Alliance) and the opposition, which is seen as having a bearing on some key economic legislations that await parliamentary approval during the upcoming session.

The central government is expected to push through major economic legislations like bankruptcy code and Goods and Services Tax (GST) Bill during the upcoming Budget session of parliament.

In addition, a weak rupee dented the equity markets. The rupee closed unchanged from its previous close of 68.47 to a greenback.

During the intra-day trade, the Indian rupee touched a low of 68.55 level on spot.

“Custodian banks were heard to be bidding for US dollars and central bank may have been very active in the day’s trade,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.

However, the sentiments remained bullish as the US Federal Reserve’s January meeting minutes lessened the chances of a rate hike in March.

A US rate hike could potentially lead to massive amounts of pullback of foreign funds from emerging economies like India. “Short-covering, value-buying and positive global indices restored investors’ risk taking appetite and rose the markets higher,” And James, co-head, technical research desk with Geojit BNP Paribas Fincial Services, told IANS.

Nitasha Shankar, vice president for research with YES Securities, cited that broader markets ended margilly in the green recovering from day’s low. “Market breadth though ended in favour of the bulls. It rrowed the positive advance decline ratio. All sectorial indices ended in the green,” Shankar noted.

Sector-wise, all the 19 indices of the BSE gained in the day’s trade. The healthcare index zoomed by 271.31 points, IT (information technology) index rocketed by 202.53 points, capital goods index augmented by 186.42 points, banking index appreciated by 177.05 points and the FMCG (fast moving consumer goods) index edged up by 107.46 points.

Both foreign and domestic institutiol investors (FIIs and DIIs) were net buyers during the day’s trade. The data with stock exchanges showed that FIIs invested Rs.418.64 crore, while the DIIs’ bought stocks worth Rs.712.12 crore.

Major Sensex gainers during Thursday’s trade were Dr.Reddy’s Lab, up 4.52 percent at Rs.3,094.95; ONGC, up 4.50 percent at Rs.208.85; Hero MotoCorp, up 3.85 percent at Rs.2,620.95; ICICI Bank, up 2.83 percent at Rs.196.10; and Lupin, up 2.68 percent at Rs.1,777.15.

Major Sensex losers during the day’s trade were Maruti Suzuki, down 2.53 percent at Rs.3,654.90; Asian Paints, down 2.09 percent at Rs.835.95; BHEL, down 1.84 percent at Rs.103.80; Axis Bank, down 1.39 percent at Rs.397.95; and Reliance Industries, down 1.19 percent at Rs.941.15. (IANS)

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