Indian markets finished yesterday’s session with strong gains with Sensex and Nifty surging closed over 3% as institutional investors stepped in to buy beaten-down banking stocks. Supported by positive global cues, the Sensex soared 995 points to 31,605 while the Nifty settled 3% higher at 9,314 points. The Nifty banking index rose 7%, with Axis Bank surging 14.2% and heavyweights HDFC Bank and ICICI Bank gaining 5.8% and 9%, respectively.
Axis Bank surged after a report said private equity group Carlyle was in discussions with the lender for a fund infusion. Axis Bank however clarified that it has not taken any such decision in this regard.
Experts said that the sudden rise in banking shares forced some investors to cover their short positions ahead of the derivatives expiry today.
The banking index lost 8.3% last week and is down 41.8% so far this year on concerns of defaults by businesses hit by the Covid-19 pandemic.
The Nifty information technology index was one of the top gainers, ending 2.8%, higher, led by a 3.7% surge in Infosys Ltd and a 3.2% gain in TCS.
Here is what analysts said on yesterday’s market action:
Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities: “Markets have been consolidating in the past few trading sessions. Trend support for Nifty 50 is seen at 8800; broader markets remain strong above the same. On the higher side the initial target is seen at 9500, above which further upside up to 10,000 remains a possible. Open interest concentration is seen at 9000 put and 10000 call for the June series. Open interest addition is seen in banking and IT stocks; expect the same to trade with a positive bias.”
Manish Hathiramani of Deen Dayal Investments: “The Nifty 50 more than made up for its sluggish trading over the last few days in today’s session, we did not breach the crucial level of 8980 but went right ahead and crossed 9175 which was the price point for the upside to get activated. The markets moved smartly and with an extraordinary vigor and closed above 9,300. If we can keep above 9350 in the next few trading sessions, we could achieve levels closer to 9700.”
Vinod Nair, Head of Research at Geojit Financial Services: “The benchmark indices staged an intraday rally in sync with global cues, as some pockets of value buying emerged.
In spite of rising number of infections, markets expect slow return to normalcy, when lockdown 4.0 ends this week. All sectoral indices were in the green and institutional buying in banking stocks helped the bank index gain by over 7%. The volatility is expected to continue, ahead of tomorrow’s F&O expiry.”
Meanwhile the rupee fell yesterday against the US dollar after trading in a narrow range during the day. The rupee settled 6 paise lower at 75.72, as compared to the previous close of 75.66. During the day, the rupee traded in the range of 75.56 to 75.74. The US dollar edged up against other Asian currencies too as rising US-China tensions over proposed security laws for Hong Kong prompted investors to latch on to the safety of the dollar.
The dollar index, which tracks the movement of the greenback against a basket of six other currencies, was up 0.21% to 99.118.
Financial markets around the world have been caught this month between headlines on worsening China-US relations and optimism over the easing of coronavirus-induced restrictions in many countries. US President Donald Trump said on Tuesday the United States would announce before the end of the week a strong response to China’s planned national security legislation for Hong Kong.
Domestic equity markets were firm in afternoon trade with Sensex surging over 1000 points. Foreign institutional investors were net buyers in the capital market, as they bought equity shares worth Rs4,716.13 crore on Tuesday, according to provisional exchange data.
“Facebook-Reliance deal related flows are expected over the next few sessions and this could cap up side in USD-INR. However down side too shall be limited as the RBI is likely to absorb the inflows to boost forex reserves,” said Abhishek Goenka, Founder and CEO, IFA Global.
So far this year, the rupee is down over 6% against the US dollar, hitting a low of 76.91 per US dollar.
An electronic ticker board indicates stock prices at the Bombay Stock Exchange building in Mumbai. Supported by positive global cues, the Sensex soared 995 points to 31,605 while the Nifty settled 3% higher at 9,314 points yesterday.
