Sensex soars 258 pts on short covering ahead of FO expiry; North Korea fears ease
Positive global cues post easing of geopolitical tensions between the US & North Korea and short covering ahead of August derivative contracts expiry brought bulls back at Dalal Street on Wednesday.
The 30-share BSE Sensex rallied 340 points intraday but pared some gains in late trade due to volatility ahead of expiry. The index saw 258.07 points gains to close at 31,646.46, driven by index heavyweights Reliance Industries, ITC and HDFC Group stocks.
The 50-share NSE Nifty failed to hold 9,900 level, up 88.35 points or 0.90 percent to close at 9,884.40.
Overall the market has been in moving in 200 points range on the Nifty after hitting a record high in the start of August followed by around 3 percent correction, experts said. They expect consolidation to continue in short term as investors, apart from geopolitical tensions, want to look at earnings growth in September quarter after disappointing June quarter numbers.
“We believe the market has undergone a round of healthy corrective consolidation in August 2017. The market has displayed resilience in the face of turbulent global cues and absorbed a range of adverse events like rising geopolitical tensions, FII outflows, Infosys boardroom tussle while protecting the earmarked support base of 9700 over the last four weeks,” ICICI Securities said.
It reiterated positive stance and advocated that the current consolidation should be used as an incremental opportunity to enter into quality stocks in a staggered manner to ride the next up move.
Sandeep Bhatia, Head of Equity, India at Macquarie Securities Group also advised buying on every dip as India is in a solid space backed by strong political stability and the trend is still up on broader perspective due to strong macro.
The broader markets outperformed benchmarks throughout the session as the BSE Midcap index gained 1.5 percent and Smallcap was up 1.3 percent on strong breadth. More than two shares advanced for every share falling on the exchange.
Global markets also recovered after sell-off in previous session, as investors tried to oust any nerves surrounding North Korea tensions. France’s CAC, Germany’s DAX and Britain’s FTSE were up 0.4 percent each at the time of writing this article. Asian markets barring Shanghai also closed higher as Hong Kong’s Hang Seng gained 1.2 percent and Japan’s Nikkei rose 0.74 percent.
Meanwhile, the rupee also recovered in trade today on selling of dollars by banks and exporters amid positive trend in equity market. It was trading at 63.95 against the US dollar, higher by 6 paise over previous close.
All sectoral indices barring IT closed in green. The Nifty Metal index gained the most, up 2.65 percent followed by Bank, Auto, FMCG and Pharma.
Reliance Industries (up 2.12 percent), HDFC (1.83 percent), HDFC Bank (1.24 percent) and ITC (0.75 percent) were leading contributors to Sensex’ gains.
Oil marketing companies surged in trade today, with HPCL and IOC hit fresh record highs intraday. Both stocks gained nearly 4 percent while BPCL was up 3 percent.
Mahindra & Mahindra fell over a percent after the Cabinet cleared promulgation of an Ordinance to increase the cess on mid-size, large cars and sport utility vehicles up to 25 percent from 15 percent under the new GST regime.
Infosys also extended losses for the second consecutive session, falling 0.1 percent on profit booking after pricing in the news of co-founder Nandan Nilekani returned to board as non-executive chairman.
Adani Enterprises shares surged 8 percent after the Australian Trade Minister said all approvals for Carmichael coal mine are in place and Adani group will make decisions on exporting coal from Carmichael mine to India. Other Adani Group stocks – Adani Power, Adani Transmission and Adani Ports gained 2-8 percent.
Ujjivan Financial Services soared 10 percent as its subsidiary Ujjivan Small Finance Bank received scheduled bank status from the Reserve Bank of India.
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