Sensex regains 16,000 on global, domestic cues

Our Bureau Mumbai | Updated on November 15, 2017 Published on January 10, 2012

Positive global cues in the morning were followed by an upgrade by Moody's of India's short-term foreign currency bank deposits lifted the market sentiment.



Stronger rupee, Moody's upgrade, rate-cut talk help

Stocks rallied on the bourses on Tuesday, providing much-needed relief to an over-sold market. The BSE Sensex closed past the 16,000 mark after nearly a month, rising 350 points (2.2 per cent) to end the day at 16,165.

The Nifty ended the day at 4,849.55, up 106 points (2.2 per cent). Analysts said the rally was expected as the market had been beaten down significantly in the last one month. The benchmark indices opened with a positive gap of 0.5 per cent and continued to gain through the day.

Positive global cues in the morning were followed by an upgrade by Moody's of India's short-term foreign currency bank deposits. The rating agency upgraded the deposits from Non-Prime to P3, which signifies the ability to repay short-term obligations.

“Another trigger for the day was that the rupee appreciated and crossed the 52 mark post the Moody's rating announcement. Also, bond yields moved down to 8.2 per cent,” said Mr Rikesh Parikh, Vice-President, Equities, Motilal Oswal Securities.

Rate cuts expected

Additionally, there was speculation that the RBI may look at a CRR cut at its next policy review of January 24. On Tuesday, bankers, at a pre-policy meeting with the RBI Governor, called for a cut in the Cash Reserve Ratio, along with a decrease in the key interest rates.

This led to a surge in the stocks of the realty, capital goods and banking sectors. However, analysts said that this was a broad-based rally which saw all sectoral indices ending the day in the green. Volatility dropped, with the India Vix falling by seven per cent.

On the BSE, the realty sector index was the best performer, moving up 4.2 per cent, followed by capital goods at 3.5 per cent and Bankex at 3.2 per cent.

“The RBI had been aggressively increasing interest rates, resulting in lower investments and a decline in the IIP numbers, which are currently at a 30-month low,” said Mr Saravana Kumar, Chief Investment Officer, TATA AIG Life Insurance.

Net buying by FIIs

However, there is still talk among marketmen that this euphoria may be short-lived as the RBI may not, after all, consider a rate-cut. “The RBI has already introduced liquidity infusion measures via Open Market Operations. A CRR cut would do the same. So, there is a chance that the RBI may not look at a rate cut,” said Mr Gaurav Dua, Head of Research, Sharekhan.

OMO or Open Market Operation is a measure taken by the central bank to control the money supply in the system via purchase or sale of government bonds and securities in the open market.

Among all the stocks traded on the BSE, a total of 2137 advanced while 671 declined.

FIIs were buyers in the net for Rs 324 crore on the exchanges, while DIIs were net sellers for Rs 115 crore. On the BSE, retail investors were net sellers for Rs 78 crore. The mid-cap and small-cap indices were up 2.2 per cent and 2.6 per cent respectively.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on January 10, 2012
This article is closed for comments.
Please Email the Editor