Despite firming up of inflationary trends and subdued exports, the recovery rally in the Indian equity markets continued on Tuesday, with a barometer index gaining 104 points or 0.41 percent during the day's trade.Value buying, resilient rupee and recent reform announcements restored investor confidence and supported the recovery rally which started on Monday.The positive cues dispelled negative bias that had set in on account of hardening of inflation trend in October and subdued exports performance.In addition, international volatility after the Paris terror attacks, electoral setback for the central government in Bihar and heightened chances of a US rate hike had dented buying sentiments during the recent trading sessions.
Nevertheless, attractive stock prices, recent reforms to hike foreign direct investment (FDI) limits in various sectors and hopes on goods and services tax (GST) bill getting passed during the upcoming winter session of parliament brought back investors. Furthermore, the market extended Monday's gain on the back of crude prices in the Indian basket falling below $40 a barrel.Besides, the finance minister’s assurance of achieving fiscal deficit target of 3.9 percent of gross domestic product (GDP) for the current fiscal bolstered investors' confidence.Initially, both the bellwether indices opened higher in sync with their Asian peers and in line with positive close for both the US and European exchanges on Monday.However, some selling pressure was witnessed around noon, post which markets scaled back led by a positive opening in European exchanges.
On Tuesday, the wider 50-scrip Nifty of the National Stock Exchange (NSE) made gains during the day's trade. It closed higher by 30.95 points or 0.40 percent at 7,837.55 points.Similarly, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed in the positive territory.The S&P BSE Sensex, which opened at 25,897.88 points, closed at 25,864.47 points, up 104.37 points or 0.41 percent from the previous day's close at 25,760.10 points.The Sensex touched a high of 25,948.20 points and a low of 25,732.79 points during the intra-day trade.The barometer index had closed the previous day's trade with gains of 149.57 points or 0.58 percent.Market observers said that value buying coupled with positive global indices and recent reforms measures supported the recovery rally.
"The recovery rally continued on the back of value buying due to attractive prices. Recent reform measures like hiking the FDI limits and positive global markets too supported the rally," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS."However, investors were cautious ahead of the release of FOMC (Federal Open Market Committee) minutes of the October meeting. The minutes are scheduled to be released on November 19," James said.The October meeting minutes of FOMC will give further cues on whether or not the US Fed will raise interest rates in December.Vaibhav Agrawal, vice president, research, Angel Broking, told IANS: "With the end to the earnings season and in the absence of any major domestic triggers, we expect markets to continue to react to global cues. Going forward, we expect volatility to increase as we near the FOMC rate hike decision."
The rupee closed Tuesday's trade lower by 4 paise at 66.03 to a US dollar from its previous day's close of 65.99 to a greenback. The foreign institutional investors (FIIs) were net sellers in the day's trade at stock exchanges, whereas the domestic institutional investors (DIIs) were net buyers. According to data with stock exchanges, the FIIs sold stocks worth Rs.492.45 crore, while the DIIs bought stocks worth Rs.783.02 crore.Nitasha Shankar, vice president for research with Yes Securities, told IANS: "Midcap and smallcap indices outperformed the headline index and market breadth favoured the bulls with 1,390 advances and 1,298 declines.""Recently, hammered down sectors saw buying in trade which included metal, FMCG, pharma and autos. Banking index remained under pressure following sharp rise in trade yesterday."Sector-wise, fast moving consumer goods (FMCG), healthcare and automobile. On the other hand, banking, consumer durables and information technology (IT) stocks fell.
The S&P BSE FMCG index augmented by 169.79 points, healthcare index gained by 129.22 points and metal index was up by 72.67 points.The banking index receded by 51.38 points, consumer durables index declined by 48.21 points and IT index was lower by 35.69 points.Major Sensex gainers during Tuesday's trade were Gail, up 4.04 percent at Rs.306.55; ITC, up 2.91 percent at Rs.348.15; Vedanta, up 2.68 percent at Rs.92.05; Hindalco Industries, up 2.15 percent at Rs.80.80; and Tata Steel, up 2.05 percent at Rs.234.50.The major Sensex losers were Infosys, down 1.77 percent at Rs.1,061.10; Dr.Reddy's Lab, down 1.73 percent at Rs.3,440; Axis Bank, down 1.32 percent at Rs.475.25; Bajaj Auto, down 0.82 percent at Rs.2,363.85; and Reliance Industries, down 0.59 percent at Rs.927.50.