Positive global cues lift equity markets

Mumbai, May 25: Positive global cues, coupled with value buying and expectations of healthy monsoon rains, lent a fillip to the Indian equity markets on Wednesday.

Further, an upgrade of India-based equities by a global investment bank and fresh influx of foreign funds catapulted both the key benchmark indices to touch their highest monthly levels. Consequently, the key indices closed the day’s trade with healthy gains, with buying witnessed in banks, capital goods, automobile, information technology (IT) and oil and gas stocks.

The wider 51-scrip Nifty of the tiol Stock Exchange (NSE) crossed its psychologically important mark of 7,900 points. It gained 186.05 points, or 2.40 percent, to close at 7,934.90 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 25,432.10 points, closed at 25,881.17 points — up 575.70 points or 2.28 percent from the previous close at 25,305.47 points.

The Sensex touched a high of 25,897.87 points and a low of 25,430.59 points during the intra-day trade.

The BSE market breadth was skewed in favour of the bulls — with 1,579 advances and 960 declines.

Both the key indices had ended on a positive note during the previous trade session on Tuesday.

The barometer index had risen by 75.11 points or 0.30 percent, while the NSE Nifty had inched up by 17.80 points or 0.23 percent. In terms of broader markets, the midcap and smallcap indices gained around one percent each.

Initially on Wednesday, the key indices opened on a higher note, in-sync with their Asian peers, which rose on the back of positive macro-economic data from the US.

The rise in US home sales data provided investors with hope of a continued recovery in the US economy, even after a speculated interest rate hike in June. Besides, European markets which also touched their new four weeks’ high helped domestic indices surge.

The European markets surged after Greece agreed to a deal to unlock a further 10.3 billion euro worth of loans from its intertiol creditors.

In terms of domestic factors, investors’ risk-taking appetite got a boost after Indian equities were upgraded by Morgan Stanley to ‘Overweight’ from ‘Equal Weight’ status.

The global investment bank cited optimism over expectations of better monsoon and hopes of further rate cuts by RBI (Reserve Bank of India’s) as the prime reasons for the upgrade.

Predictions of better-than-expected monsoon rains by private weather forecaster Skymet also supported prices. In addition, short-covering, value buying and higher crude oil prices cheered investors.

The rise in demand for Indian equities also arrested rupee’s weakness, even as the US dollar strengthened against its global peers.

The rupee strengthened by 41 paise to 67.34-35 against a US dollar from its previous close of 67.76 to a greenback.

“Positive US macro-economic data and the subsequent rise in the US stocks helped Asian and domestic markets to rise. Value buying and predictions of healthy monsoon rains supported prices,” And James, chief market strategist at Geojit BNP Paribas Fincial Services, told IANS.

Dhruv Desai, director and chief operating officer of Tradebulls, pointed out that long positions were seen to be rolled over a day before the F&O (Futures and Options) expiry.

“If the longs continue to get roll over, then market may see positive trend on expiry day,” Desai told IANS. “Market has closed above 7,900 which was its previous resistance and now 8,000 is the next resistance for the market.” Vaibhav Agarwal, vice president and research head at Angel Broking, said that the rally on the domestic bourses was further aided by a foreign brokerage upgrading the Indian equity market to ‘overweight’ from ‘equalweight’. “The markets may remain volatile due to global headwinds,” Agarwal said.

Both the foreign institutiol investors (FIIs) and the domestic institutiol investors (DIIs) turned net buyers during the day’s trade. Data with stock exchanges showed that the FIIs bought scrip worth Rs.495.08 crore and the DIIs purchased stocks worth Rs.337.22 crore.

Sector-wise, all the 19 sub-indices of the BSE witnessed healthy buying, led by banking, capital goods, automobile, IT and oil and gas stocks.

The S&P banking index accelerated by 593.24 points, followed by the capital goods index, which augmented by 381.39 points; the automobile index surged by 328.26 points, the IT index rose by 248.90 points, and the oil and gas index gained by 178.72 points.

Major Sensex gainers during Wednesday’s trade were ICICI Bank, up 4.48 percent at Rs.234.45; BHEL, up 4.34 percent at Rs.122.65; Larsen and Toubro (L&T), up 4.02 percent at Rs.1,291.30; Bajaj Auto, up 3.96 percent, at Rs.2,478.85; and Maruti Suzuki, up 3.47 percent at Rs.4,053.60. The lone Sensex loser during the day’s trade was Cipla, down 4.97 at Rs.470.30. (IANS)