Indian equity indices staged an impressive comeback on Monday, snapping a five-day losing streak.
The domestic markets rebounded on the back of short-covering and strong cues from the Asian and European markets.
Indian markets started the day on a positive gap. Banking stocks, which were till last week hammered, outperformed the benchmark index on Monday. Bankex, the banking index of Bombay Stock Exchange (BSE), gained 654.34 points, or 12.30%, and closed the day at 5,973.84 points. All the BSE sectoral indices that had seen their 52-week lows last week, ended on the positive terrain on Monday.
Anita Gandhi, head of institutional business at Arihant Capital Market, said, ?The Reserve Bank of India?s (RBI) move to cut the cash reserve ratio (CRR) and to infuse liquidity in the market has done wonders in the market. We also saw huge short-covering in bank stocks after an assurance from the finance minister (FM) earlier in the day that the government will soon announce more measures to increase the amount of cash in the financial system.?
Earlier, the finance minister said, the government the RBI and the Securities & Exchange Board of India (Sebi) are working on a co-ordinated action plan. At the Bankex, gains were led by a surge in ICICI Bank and Axis Bank stocks.
?We also assume that this is a temporary pullback rally, triggered by the positive international markets and the hope from the FM about the liquidity situation in the country. We might see some further cut in the CRR soon to inject more liquidity in the market,? concluded Gandhi.
Apart from the banking index, all the BSE sectoral indices ended the day with gains. Capital goods (CG), consumer durables (CD) and realty gained over 9% on Monday.
Though some of the dealers in the market say the mayhem in the global markets is still far from over, and it’s possible that foreign institutional investors (FII) would continue to sell their stocks and stay away from emerging markets for some time. One should not get carried away if there is any kind of a bounce back, as further selling is expected.
Though the domestic market ended on a positive note, FIIs continued their selling and were net sellers of Rs 1,060.60 crore, while the domestic institutional investors (DIIs) were net buyers of Rs 582.31 crore, as per the provisional figures furnished by BSE.
