Market gets a 259-pt lift as economy shows traction
Mumbai : Stocks today wiped off their Brexit losses suffered last week by soaring over 259 points, in line with a global rally, on improving prospects of the economy to close just below the 27,000-mark.
This is the strongest quarterly show of the market in two years since Prime Minister Narendra Modi’s historic election win in 2014.
The broader NSE Nifty scaled the 8,300 mark for the first time this year.
Of late, the government has taken a clutch of steps to turn around the economy as it relaxed FDI rules, cleared pay hike for its employees and approved a new mineral exploration policy and model law on shops and establishments. All this cheered investors, dealers said.
Covering-up of short positions on expiry of June derivative contracts at the end of the session helped too.
The changed arithmetic in the Rajya Sabha gave investors more reasons to feel buoyant about the prospects of the GST Bill that the government says may be passed in the upcoming monsoon session of Parliament.
Good progress in the monsoon so far also came as a big positive.
The Sensex closed higher by 259.33 points, or 0.97 per cent, at 26,999.72. The gauge had gained 342.68 points in the previous three sessions.
Also, the 50-share NSE Nifty regained the 8,300-mark and settled at 8,287.75, up 83.75 points, or 1.02 per cent.
Auto stocks and consumer durables stocks remained in the limelight as companies looked forward to strong growth in sales this year as a result of implementation of the 7th Pay Commission recommendations.
An appreciating rupee against the US dollar provided more support.
Easing worries about Britain’s decision to leave the European Union and its impact on the global economy came as good news for Asian and London markets.
Globally, Asian markets ended higher. Hong Kong’s Hang Seng rose 1.75 per cent, Japan’s Nikkei 0.06 per cent but Shanghai Composite Index shed 0.07 per cent. European markets too advanced as Paris was up 0.27 per cent.
As many as 28 scrips out of 30-share Sensex pack ended higher.
Meanwhile, foreign portfolio investors (FPIs) net bought shares worth Rs 102.91 crore during Wednesday’s trading session, as per provisional data.
Dr Reddy’s emerged as the top gainer, by rising 3.38 per cent, followed by NTPC (3.17 per cent).
Other major gainers that contributed to the rally were Axis Bank, Tata Motors, Tata Steel and Bharti Airtel.
Among S&P BSE sectoral indices, realty rose the most by 2.39 per cent, followed by power 2.19 per cent, metal 1.74 per cent, banking 1.46 per cent, consumer durables 1.44 per cent, auto 1.39 per cent, capital goods 1.21 per cent, PSU 0.99 per cent and FMCG 0.89 per cent.
In the broader markets, the mid-cap index climbed 1.26 per cent while small-cap ended 0.94 per cent higher.
“The positive trend prevailing in the market was given a fillip after the Cabinet approved the recommendations of the 7th Pay Commission. An increased payout is likely to give a boost to consumer spending and lift demand for discretionary consumption goods,” said Shreyash Devalkar, Fund Manager, Equities, BNP Paribas Mutual Fund.
US stocks surged for the second day in a row yesterday on speculation that the US Federal Reserve will delay interest rate increases in the wake of Brexit vote. However, Europe was trading lower.
The market breadth remained positive as 1,598 stocks ended in the green, 1,011 closed in the red and 221 stayed flat.
Total turnover firmed up to Rs 3,108.98 crore, from Rs 2,699.45 crore yesterday.