Sensex, Nifty shrug off trade war fears to end higher
The benchmarks witnessed valuebuying in banking, metal, pharma and auto counters.
Analysts said that the benchmarks witnessed valuebuying in banking, metal, pharma and auto counters despite weak domestic and global cues as investors awaited the RBI’s monetary policy decision scheduled on Wednesday.
It is widely expected that RBI will cut the benchmark interest rate for the fourth time in a row to boost the economy at a time when key indicators are pointing towards a slowdown, analysts said.
Analysts also felt that hopes of an economic stimulus by the government bolstered sentiment as the government on Monday said it will soon hold discussions with representatives of foreign portfolio investors amid continuing overseas fund outflow from the markets following the decision to impose a surcharge on a certain class of such investors.
Besides, the Finance Minister Nirmala Sitharaman said she would meet representatives of various sectors and "fairly quickly" come out with steps to help them.
Investors also cheered data which showed India’s services sector activity rise to a 12-month high in July, boosted by fast output growth and strong domestic and international demand, pushing job creation to an eight-and-a half year high.
Analysts expect volatility to persist as the market is expected to be largely driven by the ongoing quarterly earnings and the outcome of the RBI policy meet outcome on Wednesday.
Market at a glance
BSE Sensex closed 277.01 points, or 0.75 per cent, higher at 36,976.85. While NSE Nifty ended at 10,948.25, up 85.65 points or 0.79 per cent.
In the 30-pack Sensex, 22 stocks ended in the green and 8 in the red with Power Grid as the worst performer and YES Bank the best. RIL, TCS, Tata Motors and Bajaj Auto too joined RIL on the losers list, slipping up to 2 per cent.
Tech Mahindra, Bajaj Finance, Maruti Suzuki and Bharti Airtel were among other Sensex stocks that advanced.
The BSE Midcap index advanced 1.44 per cent and the BSE Smallcap index ended 1.72 per cent higher outperforming benchmark Sensex.
BSE Capital Goods index recorded gains of 2.12 per cent followed by Telecom and Realty index. BSE Energy was among the worst performers.
In terms of index contribution, HDFC, ICICI Bank, L&T and Axis Bank were the top support while RIL, TCS, Infosys and Power Grid were the top drag on Sensex.
Nifty closed 0.65 per cent higher and advance decline ratio was at 2:1. other indices, barring Nifty Media, Technology and Energy, closed in green. Nifty Mid cap index managed to gain over 1.5 per cent on the back of exceptional strength in SRF and DHFL. Today, we saw massive short covering in fundamentally weak companies which have fallen more than 25 per cent in last three months, implying short term bottom for the market is in place. Bank stocks closed higher ahead of tomorrow’s monetary policy announcement.
-Shrikant Chouhan, Head Technical Research, Kotak Securities
Market recouped Monday’s losses aided by broadbased buying across sectors supported by FMs decision to have a discussion with FPIs amid continued outflow of liquidity. Global cues were positive due to China’s step to prevent further slid in yuan, which could ease trade war concerns. While hope for a 25 basis point rate cut in the RBI meet tomorrow provided some support to the trend
-Vinod Nair, Head of Research, Geojit Financial Services
On the global front, Asian shares closed lower after US tagged China a currency manipulator leading to a rapid escalation of the US-China trade war. MSCI's broadest index of Asia-Pacific shares outside Japan ended down 0.75 per cent after brushing its lowest since January. It has lost 3.7 per cent so far this week. The Shanghai Composite Index retreated 1.4 per cent, while Japan's Nikkei shed 0.7 per cent.
European stocks traded higher in morning trade after posting their biggest two-day drop in over 3 years, as upbeat German data soothed some of the nerves around the past week's escalation of US-China trade tensions.