Nifty has to stay above 7,650 for the rally to continue
We had mentioned last Friday that that Nifty, Sensex are within days of a sharp rally and yesterday that the market indices are deeply oversold and that it has to close above 7,600 for a pullback rally. As expected, there was a pullback rally and major indices in the Indian stock markets rose by more than 1.70%. A strengthening rupee, efforts to restart reforms and expectation of more rain, coupled with positive Asian market cues, propelled the market higher.
Prime Minister Narendra Modi on Tuesday met union ministers, corporate heads and economists to discuss global markets' turmoil sparked off by the Chinese economic slowdown and attendant opportunities for India.
"The general consensus (at the meeting) was that growth of emerging economies is all slowing down, except that we (India) are growing at 7%; so how can we take advantage of this opportunity (of the slowdown elsewhere)?" Confederation of Indian Industry president Sumit Mazumdar told reporters after the meeting. "Our economic foundations are strong; that is why we have not been affected by recent Chinese events. However, the prime minister told us that in this situation the industry also should show some risk-taking ability," he added.
Analysts pointed out that government's consultative efforts to understand the problems of India Inc at the time of global markets turmoil and positive Asian market cues boosted the Indian equity markets. The market's upward trajectory is being supported by the domestic retail and institutional investors, who have been investing in stocks, while the foreign portfolio investors (FPIs) are shipping-out funds.
In addition to the government's efforts, easing investors' anxiety was the Indian rupee gaining strength a day after falling to its lowest levels against the US dollar in over two years. The Indian rupee closed at 66.55 to a dollar, a gain of 27 paise from its previous close of 66.82 to a greenback. The rupee had touched an intra-day weakest point of 66.90.
The other factor that boosted investor confidence was the clarification given by the India Meteorological Department (IMD) that it had not lowered its long period average rainfall projections.
Sector-wise, healthy buying was observed by banking, capital goods, automobile, metal and oil and gas stocks. However, intense selling was observed in BSE's consumer goods, healthcare and fast moving consumer goods (FMCG) stocks.
The S&P BSE banking index zoomed by 603.31 points, capital goods index rose by 345.59 points, automobile index gained by 225.80 points, metal index rose by 199.28 points and oil and gas index was higher by 86.55 points. The S&P BSE consumer durables index went down by 188.03 points, FMCG index fell by 60.18 points and healthcare index sank by 48.31 points.
Major Sensex gainers during Tuesday's trade were: Gail, up 6.48% at Rs.295.05; Tata Steel, up 5.97% at Rs.228.80; BHEL, up 5.60% at Rs.212.20; Axis Bank, up 5.13% at Rs.473.65; and ICICI Bank, up 4.75% at Rs.261.10.
The major Sensex losers were: Hindustan Unilever, down 2.15% at Rs.802.45; Bharti Airtel, down 0.09% at Rs.346.75; ITC, down 0.08% at Rs.313; and Infosys, down 0.03% at Rs.1,059.30.
The top gainers and top losers of the major indices in the Indian stock markets are given in the table below:
The closing values of major Asian indices are given in the table below:
Among European indices, DAX was at 10,346.17, up 2.29% and FTSE 100 was at 6,163.06, up 1.46% while S&P was trading 1952, 1.6% higher.