Snapping its six-day losing streak, the benchmark BSE Sensex today surged 359 points to recover from near eight months low to 26,840.50 on value-buying as MSCI deferred inclusion of China A shares in its index.
Moreover, rupee’s recovery against dollar to Rs 63.78 (intra-day), too boosted sentiment.
The Sensex opened on a strong footing at 26,517.32 and continued its upward trend to hit day’s high of 26,934.74 on across-the-board value buying in blue-chips.
Market Outlook by Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services
MSCI’s decision on inclusion of China A shares in the EM index had weighed on market performance in June. Now as the decision of inclusion has been delayed, market has viewed this positively. However, we believe market is likely to focus back on earnings growth outlook for FY16/17. So we are likely to consolidate further down. Also, recent crude and rupee are not supportive for the market.
However, due to profit-booking at higher levels, the index slipped at the fag-end and closed 359.25 points or 1.36 per cent higher at 26,840.50.
The gauge had lost 1,367.74 points in previous six days.
Brokers said apart from value buying, MSCI deferring inclusion of China stocks to its benchmark indices, rather opting to sort out regulatory issues, bolstered trading sentiments.
Stocks of BHEL emerged top gainers among 30-Sensex stocks by surging 4.21 per cent to Rs 251.40, followed by Wipro 3.60 per cent to Rs 563.30.
Market View by Anand James, Co Head Technical Research Desk, Geojit BNP Paribas
The market gained strength today after seven consecutive days of losing streak, supported by banking, oil, technology and capital goods stocks. FIIs were net sellers in equity for that last three days, but the 8000 mark in Nifty looks to have given a psychological reason for bargain hunting. It is also possible that the deferment of China’s mainland stocks inclusion in MSCI may have given an additional reason for buyers to chase prices higher. However, with Australia’s Met also joining in with warnings over El Nino phenomenon, India’s monsoons faces threat of being exposed to severe El nino conditions. Further, inflation worries continue to simmer in the background, as Crude oil continues to be edge higher, improved demand and expectations of falling US shale production reduced the impact of a large global supply overhang.
The 50-share NSE Nifty halted its seven-session falling trend and reclaimed the 8,100-mark by surging 102.05 points or 1.27 per cent to close at 8,124.45.
Other gainers on the Sensex included, Bajaj Auto 3.08 per cent, RIL 2.49 per cent, L&T 2.37 per cent, Tata Power 2.22 per cent, ICICI Bank 1.85 per cent, Infosys 1.69 per cent, TCS 1.72 per cent and Tata Motors 1.40 per cent.
Stocks of sugar companies were back in the limelight after the government today approved Rs 6,000 crore interest-free loan to sugar mills to help them clear partly cane price arrears to farmers that has touched about Rs 21,000 crore.
Market View by Gaurav Jain, Director, Hem Securities
A relief rally after seven consecutive selling trading session was witnessed at the bourses on the back of short covering, lower level buying. Deferral of China’s shares into MSCI index, strong global cues and stronger rupee lifted the sentiment. The market strengthened further in afternoon trade, supported by short covering in banking & financials, oil, technology and capital goods stocks.
Meanwhile, foreign investors sold shares worth Rs 645.02 crore yesterday as per provisional data.
Sectorally, the BSE IT gained the most by surging 2.08 per cent, followed by capital goods 2.04 per cent, auto 1.82 per cent, oil&gas 1.33 per cent and bankex 1.26 per cent.
Tracking overall trends, broader markets were also in better shape with BSE small-cap index rising 1.11 per cent and mid-cap index gaining 1.08 per cent.
Globally, a weak trend was seen in other Asian markets and higher opening in European markets.