Sentiments uplifted in the Indian equity markets on Monday -- in the wake of slowdown in US job-creation and on the eve of the release of key economic data points -- leading to a barometer index gaining over 90 points in the late-afternoon trade session.The barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) rose 93 points or 0.33 percent around 2.00 p.m. The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading in the green. It rose 27 points or 0.32 percent at 8,591.70 points.The S&P BSE Sensex which opened at 28,250.78 points, was trading at 28,329.63 points -- up 93.24 points or 0.33 percent from the previous day's close at 28,236.39 points.The Sensex touched a high of 28,417.59 points and a low of 28,228.27 points in the intra-day trade so far.
Analysts observed that the equity markets reacted positively to the slowdown in the US jobs growth in July. This data might deter the US Federal Reserve from raising interest rates in September or to wait until December. With higher interest rates in the US, the FPIs (Foreign Portfolio Investors) are expected to be led away from emerging markets such as India."The jobs data that was released late on August 7 played on investors' sentiments. The US non-farm payroll data is key in deciding whether the Fed will raise rates or not in September," Anand James, co-head, technical research desk, Geojit BNP Paribas, told IANS.The US economy added 215,000 new jobs last month. In June the employment figures went up by 231,000, while during May the figure stood at 260,000.Other factors playing on the sentiments were the upcoming key economic data points of Consumer Price Inflation (CPI) and Index of Industrial Production. Lowering of inflation due to good monsoon spells and slowdown in industrial output will strengthen India Inc's demand for an out-of-cycle rate cut by the apex bank."These data points, while being volatile, are also significant as they will show the inflation and industrial activity in the light of good monsoon," said Devendra Nevgi, chief executive of ZyFin Advisors.
The RBI, in its third monetary policy review on August 4, had kept the repurchase rate, or its short-term lending rate, unchanged at 7.25 percent. The RBI had informed that it will await further transmission of the earlier cuts by banks and data points.Markets are doubtful over the RBI's ability for a future easing of the monetary policy in the hindsight that the US Fed's decision on its own rates is coming up in September.Nevgi added that the markets were also upbeat on the possibility that the government might find a way to end the impasse in parliament and pass key legislations like the GST (goods and services) bill."The markets are confident that the government will find a way to pass and implement the GST bill on time. The signals that are coming -- like a proposed joint special session to get the bill passed -- are very encouraging," Nevgi said.
Investors have been reluctant to chase higher prices given the possibility that the reform process might be stalled due to the government's inability to conduct business in Parliament.Sector-wise, healthy buying was observed in banking, information technology (IT) and healthcare stocks. However, oil and gas and metal sectors came under selling pressure.The S&P BSE banking index increased by 132.40 points, followed by IT index which gained 73.08 points and healthcare index which rose by 49.81 points.However, the S&P BSE oil and gas index fell by 14.96 points while metal slipped by 8.02 points.