Stocks
Nifty, Sensex reverses to bull mode: Tuesday closing report

A short-term uptrend is likely as markets finished strongly well above the support of 6,140, mentioned yesterday.

The markets opened in the red, continuing its downtrend from yesterday. However, at 10:45 am, the markets suddenly saw volumes and volatility, shot up to 6,124 within a few seconds from 6,090—all this before Raghuram Rajan announced policy rates. Please refer to the fully story published here. After that, the bulls took control and sent the markets up through the rest of the trading session, well above the support of 6,140, mentioned yesterday.
 

The S&P BSE Sensex opened in the red at 20,593, then hit intra-day low in early trade at 20,493 before a stunning spike sent the market upwards. It hit an intra-day high of 20,952 before closing strong at 20,929 (up 358.73 points or 1.74%). The Nifty opened at 6,107, hit an intra-day low of 6,079 and then climbed upwards all the way to 6,228 before closing at 6,220 (up 119.80 points or 1.96%).
 

The breadth of the market was largely positive. Out of 935 stocks, 773 were down, 390 were up and 49 were unchanged. The volumes on the National Stock Exchange were higher, at 63.96 lakh shares compared to yesterday’s 50.25 lakh shares, underscoring the strength.
 

All the sectoral indices were in the green, with Bank Nifty finishing up 4.35% followed by finance which was up 3.54%.
 

Of the 50 stocks in the Nifty, 47 stocks advanced and 3 declined, indicating clear strength. The top five gainers were Maruti (8.75%), JP Associates (7.76%), ICICI Bank (6.26%), IndusInd Bank (5.63%) and Axis Bank (5.16%). The top losers were Ranbaxy Jindal Steel (-0.90%), ITC (-0.29%), Bharti (-0.13%).
 

Today’s markets were dictated by Raghuram Rajan’s decision to hike repo rates. Usually, a rate hike would send markets downwards. But here’s a catch. Investors were worried that Mr Rajan may hike the repo rate by as much as 50 basis points. This didn’t happen.
Instead, as expected, he hiked it by 25 basis percentage points, to 7.75%. The markets were relieved and went up. However, it is unclear how inflation would play out in the future as Mr Rajan continues to be worried about it.
 

Meanwhile, the global markets took a breather and were seen flat, with Tokyo Nikkei marginally down 0.49%. All the eyes are on the US Fed now. European markets were marginally up across all bourses. US stock futures were trading with a positive bias, with dollar firming up.

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While selecting a mutual fund scheme, most investors just look at past performance over fixed periods. The performance of schemes over 1-year, 3-year or 5-year periods is easily available on many online mutual fund research and rating sites. The rating given by some sites depends on the returns of the scheme over these periods. But, as we have argued in a number of articles in the past, this can be misleading as the returns calculations depend on the start date and end date chosen. In Moneylife’s annual fund performance analyses, we not only analyse the performance of the shortlisted equity schemes over monthly rolling periods of the past five years, but also rank the schemes by their performance when the markets have declined. Turn to page 30 to have a look at the schemes that made it to the top 20 list. We also analyse some of the top schemes of earlier years that have under-performed in our Fund Pointer section, explaining what went wrong. Turn to page 24 for more details.
 
You may recall that Moneylife has been actively batting for senior citizens’ financial rights for a long time. With the removal of tax on reverse mortgage, the collective voice of senior citizens has finally been heard. Sucheta, in her Crosshairs section, talks in detail not only about this landmark policy move but also other concerns of senior citizens which need to be addressed, including the regulation of the various services that are springing up to take care of the seniors.
 
Financial literacy has often been touted as the single best tool for protection against faulty products, unscrupulous agents and everything else that might undermine savers’ and investors’ interests. However, how effective is financial literacy delivered in the traditional way? In our Earning Curve section, we summarise the results of a path-breaking study that measured the results of various educational interventions and found that there is a significant decay in financial education such that it makes it almost meaningless. Help with financial literacy should be just-in-time or on demand. This is why Moneylife has launched so many helplines. Turn to page 25 to find out what the researchers have found.

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Indian market trends

The Sensex and the Nifty inched up 1% each during the fortnight, along with ML Mega-cap Index...

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