We had mentioned in Friday’s closing report that Sensex, Nifty were vulnerable to a short-term decline. The major indices of the Indian stock markets were range-bound on Monday and closed with gains of around 0.50% over Friday’s close. The trends of the major indices in the course of Monday’s trading are given in the table below:
Positive global cues, along with higher crude oil prices and firm rupee buoyed the Indian equity markets for the sixth consecutive session on Monday. The key indices traded with appreciable gains to reach their new 2016 intra-day high levels, as healthy buying was witnessed in capital goods, oil and gas, and metal stocks. The BSE market breadth was skewed in favour of the bulls -- with 1,724 advances and 1,016 declines.
Even though Indian commercial banks' shares have moved higher, ignoring Brexit (Britain exiting European Union), the currency volatility risks have to be understood, said US investment banking firm Jefferies in a report. Banks need to make provisions for their exposures to corporate with unhedged foreign currency exposure (UFC) and additional capital buffer for high risk UFCEs, the report said. Jefferies estimate the risk exposure at 1.7% of gross credit exposure for banking system. Banks have built Rs13 billion in provisions and Rs29 billion in additional capital as of FY16. According to the report, Bank of Baroda (BOB) is the only to report Liquidity Coverage Ratio (LCR) in British pound implying five per cent plus of liability in that currency. “This may result in higher hedge costs going forward -- marginal NIM (net interest margin) negative. This of course depends on the currency composition on the asset side -- unfortunately we don't have sufficient public data to delve deeper," the report said. Bank Nifty closed at 18,097.65, up 0.62%.
The price of OPEC's basket of 13 crudes rose to $46.27 a barrel on Thursday, compared to $45.82 on Wednesday, according to the OPEC Secretariat. Healthy oil prices at the international level are still important for the major indices of the Indian stock markets to keep from slipping lower.
Healthy monsoon rains, more economic reforms and a firm rupee are expected to support the equity markets' upward trajectory in the coming week. According to market observers, clarity on Britain's exit from the EU (Brexit) and increased chances of stimulus measures expected to be initiated by global central banks will provide the incentive for investors to chase prices. "Domestic markets are expected to continue to behave in line with global sentiments in the near-term. However, we expect the market to remain bullish," D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, told IANS. Last week, the Indian markets gained momentum on the back of resurgent Asian and European markets which recovered after clarity emerged on the modalities of Brexit. Further, global investors were hopeful that international central banks might initiate major stimulus measures to protect growth.
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: