Short-coverings, global cues swell equity markets

Mumbai, Feb 22: Short-coverings, coupled with value-buying and positive global indices, supported the rise of the Indian equity markets on Monday. Consequently, the barometer 30-scrip sensitive index (Sensex) of the BSE closed the day’s trade up 80 points or 0.34 percent. Similarly, the wider 50-scrip Nifty of the tiol Stock Exchange (NSE) ended the day’s trade mildly in the green. It edged up by 24 points, or 0.33 percent, at 7,234.55 points.

The Sensex, which opened at 23,783.47 points, closed at 23,788.79 points — up 79.64 points or 0.34 percent from the previous day’s close at 23,709.15 points. During the intra-day trade, the Sensex touched a high of 23,855.04 points and a low of 23,674.86 points. The BSE market breadth slightly favoured the bulls — with 1,397 advances and 1,160 declines.

Initially, both the indices of the Indian equity markets opened on a positive-to-flat note, following Friday’s losses in the US, as well as European markets. In addition, a weak rupee kept investors unnerved. The rupee weakened by 14 paise to 68.60-61 to a US dollar from its previous close of 68.47 to a greenback on Thursday. The domestic currency markets were closed on Friday.

On Friday, the rupee crashed to a record low of 68.89 to the US dollar in the oversees currency markets. It ended that day’s trade at 68.72.

“Indian rupee touched a fresh 30-month-low at 68.72 levels on spot, not far from the all time low of 68.85 on spot. It closed at 68.60 to a US dollar,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS. “However, alleged hand of RBI (Reserve Bank of India) may have saved the rupee from further losses.”

According to Banerjee, the RBI may have been active on exchange traded currency futures. However, value-buying and short-coverings which were triggered on hopes of positive budgetary announcements swelled the equity markets. Market participants hoped that the central government may increase expenditure, announce tax concessions and pave the way to reduce the NPAs (non-performing assets) levels of the banking sector. Parliament’s budget session commences on Tuesday.

Besides, stiffening crude oil prices, combined with positive Asian and European markets led investors to chase stock prices higher.

Positive cues also emated from the upcoming G20 fince ministers’ meet in Shanghai, Chi. Chi’s decision to replace the head of its stock market regulator also revitalised sentiments across the stock markets. Notwithstanding the upward movement, caution prevailed over the upcoming budget session which erased most of the day’s gains. Hopes of more reform announcement were dashed by the possibility of a washout budget session.

“Firm oil, as well as rising Asian markets tilted Indian stocks bias to positive, while Nifty and Sensex helped themselves to the highest levels since February 10, 2016,” And James, co-head, technical research desk with Geojit BNP Paribas Fincial Services, told IANS.

“However, with parliament’s budget session beginning tomorrow, buyers were not seen chasing prices higher.”

Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that markets ended in the green led by positive global cues.

“With no other major triggers on the domestic front and low expectations from the budget, markets will continue to look towards global developments for direction,” Agarwal said.

“US home sales data is awaited for further indications on the US Fed rate hike. European macro data such as the German and UK GDP and Eurozone CPI figures are set for release this week.”

Nitasha Shankar, vice president for research with YES Securities, pointed out that broader markets rose in line with the headline indices. “Pharma, media, metal and energy indices ended in the green with handsome gains; while IT and PSU bank indices ended in the red,” Shankar noted.

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

The data with stock exchanges showed that FIIs divested Rs.656.93 crore, while the DIIs’ bought stocks worth Rs.597.87 crore. Sector-wise, the S&P BSE healthcare index augmented by 170.74 points, oil and gas index rose by 82.05 points and banking index edged up by 79.11 points.

On the other hand, IT (information technology) index depreciated by 29 points, utilities index was lower by 9.25 points and power index dipped by 5.52 points.

Major Sensex gainers during Monday’s trade were Hindustan Unilever, up 4.02 percent at Rs.858.85; Sun Pharma, up 2.16 percent at Rs.882.40; Reliance Industries, up 1.90 percent at Rs.962.45; Asian Paints, up 1.74 percent at Rs.868.95; and Lupin, up 1.57 percent at Rs.1,810.95. Major Sensex losers during the day’s trade were NTPC, down 2.05 percent at Rs.126.85; ITC, down 1.72 percent at Rs.299.60; Maruti Suzuki, down 1.61 percent at Rs.3,523.30; Adani Ports, down 1.39 percent at Rs.205.80; and Gail, down 1.29 percent at Rs.321.80. (IANS)