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Sensex cools down after 2-day euphoric rally; Nifty gives up 11,600

All eyes are now on the Reserve Bank of India’s rate-setting monetary policy next week.

Sep 24, 2019, 04.23 PM IST
Mumbai: Benchmark equity indices Sensex and Nifty took a breather and closed almost unchanged in a flip-flop trade on Tuesday, as bulls looked tired after two sessions of spectacular rally after Finance Minister Nirmala Sitharaman cut corporate tax last week.

All eyes are now on the Reserve Bank of India’s rate-setting monetary policy next week.

The three-day monetary policy committee meeting will begin on October 1 amid expectations of rate cut to be announced on October 4 in a bid to revive the sagging economy.

BSE’s 30-share Sensex closed 0.02 per cent or 7.11 points higher at 39,097.14 points, while NSE’s 50-share Nifty shed 0.10 per cent or 12 points to close at 11,588.20 points.

However, market sentiment was optimistic as there was growing evidence that the foreign investors were returning back to India. After buying a net of mere Rs. 35.78 crore of shares on Friday, they bought a net of Rs 2,684.05 crore on Monday, provisional data from NSE showed.

“There was strong follow up buying yesterday as indicated by the FII numbers. It is a breather the market has taken to digest the reset. The gain in earnings trajectory of companies is here to stay. This can lead to sustained improvement in cash flows and RoEs (return on equity),” said Ajay Bodke, CEO- PMS at Prabhudas Lilladher.

The expert believes that all eyes will now be on government’s H2 borrowing programme toward the end of this month, and the RBI policy.

“We need to watch out for clues as to how the government intends to bridge the shortfall in revenues due to recent tax cuts and shortfall in GST collection,” Bodke said.

Among sectoral indices BSE IT and BSE Teck led the gainers’ pack, as they rose 2.31 per cent and 1.98 per cent respectively.

BSE Capital Goods index and BSE Metal index fell the most, with 1.80 per cent and 1.70 per cent decline respectively.

In the broader market, gainers outpaced losers in the ratio of 1.2:1. Fifteen of the 30 Sensex stocks closed higher.

Oil-to-telecom major Reliance Industries Ltd. (RIL) shares contributed the most to the gains for Sensex. RIL jumped 3.22 per cent after Morgan Stanley turned more bullish on the stock.

The brokerage house said Reliance’s earnings growth clarity was improving because of better refining margins, lower tax rate and cheaper gas feedstock costs.

"Rising clarity on 2020 growth; top pick in south Asia: RIL's earnings growth is starting to be de-risked as headwinds of 1H19 turn and become key tailwinds in 2020," it said.

Infosys, the country’s second-largest software services exporter, followed next with a 3.78 per cent gain.

Global markets
European shares rose on Tuesday, following their worst day in over a month, after Washington said the United States and China would resume trade talks, Reuters reported.

MSCI's broadest Asia share index inched up 0.1 per cent, led by 0.6 per cent gains in mainland Chinese shares after the vice head of China's state planner said Beijing will step up efforts to stabilise growth.
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