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Lending rate cut, global cues lift markets
The 30-scrip sensitive index (Sensex) of the BSE closed the week’s trade with a gain of 195.18 points or 0.70 per cent to 28,061.14 points. Similarly, the 51-scrip Nifty of the National Stock Exchange (NSE) surged by 86.45 points or 1.00 per cent to 8,697.60 points.“The domestic stock markets rallied in the week gone by
Mumbai: The central bank’s decision to reduce a key lending rate, coupled with supportive global cues and healthy foreign fund inflows, lifted the Indian equity markets during the just-concluded trade week. The key indices recovered from their recent downside to register gains of around one per cent each.
The 30-scrip sensitive index (Sensex) of the BSE closed the week’s trade with a gain of 195.18 points or 0.70 per cent to 28,061.14 points. Similarly, the 51-scrip Nifty of the National Stock Exchange (NSE) surged by 86.45 points or 1.00 per cent to 8,697.60 points.“The domestic stock markets rallied in the week gone by tracking firm global markets, as strong US services sector data and an overnight rally in oil prices boosted the sentiment of the market participants,” said D K Aggarwal, Chairman and Managing Director of SMC Investments and Advisors.
The announcement by the newly-constituted monetary policy committee (MPC) headed by the (Reserve Bank of India (RBI) Governor Urjit Patel cutting a key lending rate by 25 basis points provided some boost to the domestic markets.“The market gained strongly during the early part of the week on the expectation and subsequent announcement of a rate cut by the RBI. However, the market was unable to maintain its gains and subsequently lost some ground,” stock brokerage firm Angel Broking said.
However, disappointing macro-data, measured by the Nikkei India Manufacturing Purchasing Managers Index (PMI), which showed that India’s private sector economy lost momentum in September, hampered the risk-taking appetite.While the PMI Output Index declined to 52.4, the seasonally adjusted Nikkei India Services Business Activity Index, too, registered a slower rate of expansion at 52 in September.
The equity markets were provided some relief by the International Monetary Fund (IMF) forecast of India’s growth to be raised by 0.2 percentage points to 7.6 per cent for 2016-17 and 2017-18. But caution prevailed at the start of the second quarter earnings on October 7. Tata Consultancy Services (TCS) is expected to be the first blue chip firm to come out with its results on October 13.
Nevertheless, higher crude oil prices, inflow of foreign funds and value buying at lower levels helped the key indices to maintain their upward trajectory.“Some support also came with the report that foreign investors pumped in more than Rs 20,000 crore into the capital market in September, making it the highest net inflow in 11 months,” said Dhruv Desai, Director and Chief Operating Officer of Tradebulls.
