The benchmark Sensex rebounded over 135 points to close at 27,780.83, reversing its two-day fall, led by gains in Coal India, Sun Pharma and Tata Steel on value-buying by investors.
The smart recovery came as other Asian markets shaped up.
However, sentiment remained off-colour because of lingering concerns of Greece’s debt crisis.
Market Outlook by Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services
Indian market has outperformed in spite of the correction in global markets due to the Greece issue. But FIIs are still not out of the woods. FII inflow continues to be negative in June (till date) at -Rs77bn and -Rs48bn in May. In such difficult times, MF and other DIIs have provided healthy support to the market with inflow of +Rs115bn in June (till date) and +Rs86bn in May. As the Greek-talks are currently on hold due to the upcoming referendum, global investors will continue to be at risk-off mode, till the final outcome is understood.
In a volatile session, the 30-share index, which swung between gains and losses, finally settled higher by 135.68 points, or 0.49 per cent, at 27,780.83. Intra-day, it shuttled between 27,814.53 and 27,570.95.
The gauge had lost 250.82 points in the previous two sessions on the worsening Greece’s debt situation.
Meanwhile, the benchmark ended first quarter (April-June) of this fiscal with losses.
Also, the 50-share Nifty, after moving both ways, ended higher by 50.10 points, or 0.60 per cent, at 8,368.50.
Market View by Anand James, Co Head Technical Research Desk, Geojit BNP Paribas
Even as uncertainty over Grexit kept up pressure, bargain hunting was visible and there was marked improvement in willingness to take risk. The recent price falls have obviously prompted investors to weigh in the attractiveness of domestic factors vis-à-vis, Greece issues. There is also a general consensus that Q1 numbers scheduled for release shortly may be favourable to market, probably benefitting from lower inflation in the previous months. Meanwhile, the Fed’s comments will be closely watched to see if Greece fall out may prompt the Fed from raising interest rates soon.
Brokers said value-buying in select blue-chips, coupled with a slightly better trend at other Asian markets after the previous day’s rout on Greece uncertainties, influenced sentiment here.
They said, however, caution prevailed as investors awaited further cues on Greece.
Sun Pharma closed 2.89 per cent up at Rs 874.20 after reports that the company has raised drug prices.
Other gainers that aided the recovery include Coal India, Tata Steel, Lupin, ITC and Hind Unilever.
Market View by Gaurav Jain, Director, Hem Securities
Under the fear clouds of Greece debt payment default; Indian benchmarks bounced back on the hopes of not much direct impact of it on the country. Late hour rise was also on the back of short covering. FMCG, and select oil, pharma & metals stocks supported the market whereas technology, private banks and select auto stocks lost ground.
However, software exporters led by TCS, Wipro and Infosys came under selling pressure and fell up to 1.59 per cent after revenue warnings by some IT companies.
Sector-wise, the BSE Healthcare index gained the most by rising 2.11 per cent, followed by FMCG (2.02 per cent), consumer durables (1.90 per cent), metal (1.73 per cent) and PSU (0.68 per cent).
BSE Mid-cap rose 1.33 per cent while Small-cap ended 1.07 per cent up.
Meanwhile, foreign investors sold shares worth Rs 711.88 crore yesterday, according to provisional data.
Globally, Asian markets provided some cheer after Chinese stocks halted their three-day fall. Japan’s Nikkei ended 0.63 per cent higher while Hong Kong’s Hang Seng rose 1.09 per cent.
European markets, however, were trading lower in their opening trade as investors weighed whether Greece will default on a payment due on Tuesday.
World Market: Markets on edge as Greece heads for default
Reuters – Euro zone stocks and low-rated bonds recovered the worst of their losses on Tuesday but remained on edge as Greece looked set to default on a debt repayment to the IMF and plunge deeper into financial crisis.
The breakdown of talks between Athens and international creditors over the weekend has led Greece to close its banks and impose capital controls. It has provoked market jitters worldwide, with Greeks due to vote in a referendum on Sunday that EU partners say will amount to a choice between staying in the euro or leaving.
There have been few signs of market panic even as the uncharted territory of a Greek exit from the euro zone becomes more likely, with investors citing Europe’s improved ability to fight financial contagion since the height of the euro debt crisis in 2011.
Top euro zone stocks were up 0.2 percent at 1148 GMT after Greece’s finance minister said Athens would not repay the International Monetary Fund debts due on Tuesday but added he hoped for a deal with international creditors. German Chancellor Angela Merkel said the door was open for talks.
U.S. equity futures pointed to a higher open, though the euro was down against the U.S. dollar as hedge funds stepped up sales.
“We are relatively bullish,” said Antonin Jullier, head of equity trading strategy at Citi. He said a Greek ‘Yes’ vote would be a positive outcome but a ‘No’ was likely to see the European Central Bank step in with tools to fight contagion.
“This is a complex situation and there is a lot of volatility; given the binary outcome we expect many investors will wait it out, but we already see value at current levels.”
Bank stocks were in positive territory and peripheral euro bonds recovering from losses after reports of last-minute contacts between Athens and Brussels, just hours before Greece’s international bailout package was due to expire, though a German government official said it was “too late” for an extension.
While Greek ripples were also a drag on investor sentiment in Asia, Chinese stocks broke a punishing three-day losing streak as regulators and the government stepped up efforts to prevent the past few weeks’ plunge from inflicting further damage on an already slowing Chinese economy.
“Even after these market swings, a Greek exit is still not fully discounted as a positive outcome is still possible,” BNP Paribas Investment Partners said in a note to clients.
“With a majority of Greeks in favour of staying in the eurozone, there is a decent probability of a referendum outcome in favour of the creditors’ proposals. But until the results are known, we are likely to see continued market volatility.”
The MSCI All-Country World equity index was flat. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.1 percent but remained near a five-month low hit on Monday. Japan’s stock index rose 0.6 percent while South Korea gained 0.7 percent.
In commodities, oil futures hovered below three-week lows and gold failed to attract strong safe-haven bids, even with ongoing Greek uncertainty. London nickel slid 8 percent to six-year lows and Shanghai nickel also tumbled after the Shanghai exchange broadened delivery options.
A risk gauge, the CBOE Volatility index, spiked overnight to its highest levels since February.
“There is still too much uncertainty in the markets and investors would be watching developments in Greece and China very carefully before jumping in,” said Karine Hirn, Hong Kong-based partner of Swedish group East Capital, a $3.5 billion fund management firm.