Strong economic fundamentals, value buying and attractive valuations boosted investor confidence in the Indian equity markets - leading a barometer index to gain 235 points during the late-afternoon trade session on Tuesday.The investor confidence seemed to be returning a day after the mayhem in global financial markets and a crash in China which spooked the key Mumbai index into shedding some 1,625 points, or nearly 6 percent.The barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) which opened at 25,916.26 points, was trading at 25,976.82 points (at 3.00 p.m.), up 235.26 points or 0.91 percent from its previous close at 25,741.56 points.
The Sensex touched a high of 26,124.83 points and a low of 25,298.42 points during the intra-day trade so far.A similar trend played out at the the National Stock Exchange (NSE), where the broader 50-share CNX Nifty made gains during the intra-day trade.The 50-scrip Nifty of the NSE was ruling higher at 7,878.50 points, with a gain of 69.50 points, or 0.89 percent. Analysts cited that the Monday's massive correction has made valuations attractive for not only foreign but domestic investors too."The market is riding on a wave of value buying on lower levels. The valuations have become very attractive coupled-with the statements that have come-in from the government the investors are regaining confidence," Anand James, co-head, technical research, Geojit BNP Paribas, told IANS.
There is also a sense that the strong economic fundamentals have the potential to hasten the recovery in Indian equity markets in comparison to other larger economies."The Indian economy's fundamentals are very strong, be it growth, be it lower current account deficit, slowdown in inflation, pickup in consumer sentiment and hopes of a rate cut. These factors will hasten recovery in India faster than other markets," Devendra Nevgi, chief executive of ZyFin Advisors elaborated to IANS.Other analysts pointed-out the lull in the global commodity prices, especially crude oil which has fallen to its six-year low as a major positive for the Indian economy and the markets.
"Lower commodity prices and strong fundamentals plus a push towards infrastructure creation will propel the economy. This will certainly catch the attention of the global capital markets once the turmoil has subsided," Vaibhav Agarwal, vice president and research head at Angel Broking.Industry body Federation of Indian Chambers of Commerce and Industry (Ficci) explained that Monday's fall was a transient phenomenon that should get addressed in due course."Both the government and the Reserve Bank of India (RBI) are keeping a close watch on the situation and we expect that this development would spur us into accelerating the reforms process and making Indian economy even more robust and resilient from within," said Ficci secretary general A. Didar Singh.ector-wise, healthy buying was observed in banking, oil and gas, automobile, metal and healthcare stocks.However, information technology (IT), capital goods, consumer durables and technology, entertainment and media (TECK) scrip came under selling pressure.
The S&P BSE banking index zoomed by 421.34 points, the oil and gas index augmented by 275.66 points, the automobile index gained by 245.31 points, the metal index rose by 244.46 points and the healthcare index gained by 181.83 points.On the other hand, the S&P BSE IT index plunged by 59.43 points, the capital goods index receded by 25.27 points, the consumer durables index declined by 19.12 points and the TECK index dropped by 12.57 points.