FII buying lifts markets

Sensex up 744 points; overseas rate cuts lead to rally.



Stocks rose on Friday as foreign institutional investors turned net buyers after a straight fortnight of fierce selling.

FIIs were net buyers of Indian equities for Rs 1,237 crore on Friday, while domestic institutions were net sellers for Rs 116 crore.

The Sensex was up 743.55 points or 8.22 per cent to close at 9788.06, and the broader Nifty was up seven per cent at 2,885.6.

The domestic market was also catching up with world markets, which looked up on Thursday when markets were closed here, said analysts.

On Thursday, the Hang Seng had gained 12.8 per cent, Nikkei 9.9 per cent, Nasdaq 2.4 per cent, the Dow 2.1 per cent and the FTSE 1.1 per cent.

“The major reason for the rally was the rate cut that happened in the US followed by interest rate cuts in China, Taiwan, Hong Kong and Bank of Japan. Another reason for the rally was the domestic inflation level, which came down to 10.68 per cent,” said Mr Alex Mathew, Head of Research at Geojit Financial Services.

The overseas rate cuts led to an anticipation of a rate cut here by the RBI as well, he said.

The market breadth was positive as 1,577 scrips on the BSE advanced and 916 declined. Among the sectoral indices, the BSE Metal, Oil and Gas, Bankex and Teck indices surged the most today, gaining between six and 10 per cent.

Mahindra & Mahindra, Housing Development Finance Corporation, Jaiprakash Associates and ICICI Bank were the top gainers , rising between 15 per cent and 23 per cent. Ranbaxy and TCS were the only Sensex scrips which ended in the red.

“There was good amount of profit booking by the domestic institutions today, which is why the markets slightly dipped in the afternoon,” said Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Markets.

Good buying on the first day of derivatives contracts, too, gave stocks a boost, said marketmen. NSE’s F&O segment saw a total of 28.2 lakh contracts today and a total turnover of Rs 36,959 crore.

The proposal to increase the FDI cap in private sector insurance companies from 26 per cent to 49 per cent also added to the positive sentiment, said Ms Gandhi.

The rupee gained by about 20 paise tracking the domestic equity market. The high call rates also aided the rupee, said a forex dealer with a private bank.

“There was inter-bank dollar selling as high call rates made it difficult for market participants to be long on the dollar,” he said.

Source: TheHinduBusinessLine