Though volatility hit Dalal Street on Friday (the first day of September series), equity benchmarks managed to close higher, taking the Nifty above 8000-mark. Indices rallied more than 1.5 percent in morning session following further rally in US and Asian markets, but profit booking in last couple of hours of trade (especially ahead of weekend) & weak European cues washed out more than 1 percent gains from day’s high.
The 30-share BSE Sensex rose 161.19 points or 0.61 percent to 26392.38 and the 50-share NSE Nifty climbed 53 points or 0.67 percent to 8001.95. However, the broader markets underperformed benchmarks, closing flat. In fact, the market breadth was weak in late trade as about 1403 shares declined against 1300 shares advanced on the Bombay Stock Exchange.
After recent sharp correction, experts believe that the market may see some more short covering in near term but further selling by foreign institutional investors may not be ruled out. According to them, if the Nifty crosses 8200 level, then value buying may be seen in the market.
Sanjeev Prasad, Kotak Institutional Equities finds valuations of the Indian market more reasonable post recent sharp correction. Lower valuations and weaker rupee post recent market selloff can provide for meaningful returns of 15-18 percent over the next 12 months, he believes.
For the week, the Sensex and Nifty lost 3.6 percent each. In fact, bounce back in last two sessions of the week following global recovery saved the market from further bleeding. Sharp correction on Wall Street (on last Friday) and in Chinese market (continued for two consecutive sessions initially during the week) dragged equity benchmarks 6 percent on Monday but the easing of Chinese volatility and hopes of delay in Fed rate hike improved sentiment in later part of the week.
On the global front, Asian markets barring Hong Kong ended higher today. Shanghai rallied 4.8 percent amidst reports that the government has been buying bluechips stocks to prop up the market. China’s central bank has injected 60 billion yuan via short-term lending operations at 2.35 percent. Nikkei rose 3 percent while Hang Seng lost 1 percent.
However, European markets were marginally under pressure, as investors were cautious after a roller-coaster week in global equity markets. Crude oil prices fell nearly 1 percent on profit booking after rising 10 percent in previous session.
Back home, Cairn India (up 4.6 percent) and ONGC (up 5.5 percent) topped the charts after sharp upside in crude prices overnight. However, oil marketing companies lost in trade with BPCL down over 2 percent.
Rise in copper and zinc prices led the rally in metal stocks. CNX Metal index rose over half a percent led by stocks like Vedanta (up 5.7 percent), Hindalco (up 1.4 percent) and Tata Steel (up 1 percent).
Infosys gained 2.5 percent. Sources told CNBC-TV18 that the country’s second largest software services exporter has appointed Krishnamurthy Shankar as Executive Vice President and Head of Human Resources (HR). For the first time in history of Infosys, the company appointed outsider to head its HR operations.
Bharti Airtel surged 4 percent as sources said the telecom operator is in talks to sell business operations in Sri Lanka & Bangladesh and appointed 2 bankers to lead mandate for sale.
NTPC rose 2 percent. The country’s largest power utility said it recorded highest single day generation of 733.12 million units, the highest so far in FY16, from its 18 coal based, 7 gas based, 8 solar and hydro power plants on August 27, 2015.
However, Sun Pharma lost 2 percent as the pharma major faced class action suit in US over 2009 plant closures. US Court of Appeals affirmed lower court’s findings that Caraco (the subsidiary of Sun Pharma) violated the Worker Adjustment Pact while laying off employees and shutting plants in 2009.
Lupin (down 1.9 percent), Coal India (down 1 percent) were other losers followed by TCS and L&T with marginal losses.