The market extended previous trading session’s rally further on Friday, taking the Nifty above 8000 intraday after the Federal Reserve postponed its plans of rate hike in nearly a decade. However, profit booking in last hour of trade wiped out half of gains and dragged benchmark Nifty below the psychological level post sell-off in European markets and profit booking in FMCG and capital goods stocks.
The 30-share BSE Sensex rallied 254.94 points or 0.98 percent to 26218.91 and the 50-share NSE Nifty climbed 82.75 points or 1.05 percent to 7981.90, driven by banking & financials, oil and select pharma stocks.
After the Fed event, all eyes are now on RBI monetary policy (on September 29). The market may remain positive in near term, especially till policy, feel experts.
Robert Parker, Credit Suisse reiterates his earlier view that India is likely to outperform other emerging markets. If one were to look at India’s market performance today, it clearly shows there is more focus on positive domestic cues than negative global cues, he says, adding India has been a clear beneficiary of lower commodity prices.
According to him, there is a good chance that RBI may cut rates in the upcoming meet because the economy has been moving to lower inflation trajectory and yields too have been going down. Also read – Ambit’s Holland sees Nifty testing 10,000 by year-end
The broader markets also halved gains in last hour of trade. The CNX Midcap gained 0.5 percent and Smallcap rose 1 percent. The market breadth remained in favour of advances with 1708:910 ratio.
For the week, the Sensex surged 2.4 percent and Nifty rallied 2.5 percent, continuing upside for second consecutive week but the broader markets underperformed with the CNX Midcap and BSE Smallcap indices rising 0.4 percent and 1 percent, respectively.
Global markets were on the edge a day today after the Fed meet. European markets were lower with the Germany’s DAX & France’s CAC falling 2.4 percent each and Britain’s FTSE down 1 percent. Investors remained apprehensive about growth concerns as the Federal Reserve kept rates unchanged citing global uncertainty.
In Asia, Japan’s Nikkei slid 2 percent on a stronger yen but other markets in the region managed to close in the green. China’s Shanghai and Hong Kong’s Hang Seng gained 0.3-0.4 percent.
Meanwhile, the rupee climbed to one month high, up 79 paise to 65.67 a dollar. The dollar dipped sharply against almost all major global peers after the Fed refrained from hiking rates. The dollar index fell close to the 94 level.
Banking & financials were leaders in trade today with the Bank Nifty up 2.6 percent. Hopes of rate cut in forthcoming RBI policy meet and reports of government considering hike in FII limit for private banks drove banks higher. FM Arun Jaitley says 100 percent FDI in private sector banks is under consideration but no decision has been taken yet.
Axis Bank topped the buying list, up 4.8 percent followed by ICICI Bank and HDFC Bank around 2 percent. Top lender State Bank of India and housing finance company HDFC gained 2.4 percent and 1.5 percent, respectively.
Lupin rallied 2.6 percent after approval from USFDA for antibiotic drug Clarithromycin. Even a media report saying the company is in race to acquire London-listed Sinclair IS Pharma also drove stock higher.
Among others, Reliance Industries, M&M, ONGC, Sun Pharma, Wipro and Hero Motocorp gained 2-3.5 percent. However, ITC, Larsen & Toubro, HUL, Bajaj Auto, Cipla, Bharti Airtel and Hindalco declined 0.5-1.8 percent.
Tata Motors lost 2.8 percent after Tata Steel sold close to 4 lakh shares held in its sister concern Tata Motors today, in an off-market deal.
In the broader space, Power Finance Corporation and Rural Electrification Corporation gained 2-4 percent after Finance Minster Arun Jaitley says high level negotiations are on between centre and states to deal with discoms losses. Addressing investors in Singapore, Jaitley says the government has drawn out a plan for discoms and an offer will be made to 8 stressed states soon.
ENIL surged 3.7 percent on conclusion of radio phase 3 auctions. ENIL has spent Rs 334 crore in auctions for 17 stations, while HT Media has spent Rs 340 crore in auctions.
GMR Infrastructure rose 1.8 percent and Torrent Power rallied 4.7 percent as the government announced revival of 5 additional gas-based power plants which have capacity of 3455.64 MW.
Granules India climbed 4.6 percent on getting USFDA approval for Ibuprofen tablets, a painkiller drug. Jubilant Life Sciences rose 2 percent on USFDA approval for migraine headache drug, Zolmitriptan orally disintegrating tablets.
SKS Microfinance plunged 15.5 percent on failing to get the small bank licence from the RBI. Morgan Stanley downgraded stock to equalweight with a lowered target price of Rs 480 from Rs 550 while Religare maintained sell call with a target price of Rs 320.