Markets

RBI’s ‘accommodative’ stance lifts Sensex 1,000 pts

Our Bureau | | Updated on: Dec 08, 2021
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‘Positive global cues, coupled with the accommodative policy stance of the RBI, fired up the bulls’

Bulls kept a grip on the market on Wednesday with benchmarks closing higher for the second consecutive session, owing to RBI’s accommodative stance and positive global cues.

Despite the continuous heavy selling in the cash markets by FPIs, Sensex and Nifty gained 1.76 and 1.71 per cent, respectively, on Wednesday. FPIs have so far sold stocks worth ₹16,356 crore, data show. On Wednesday, the Sensex rose by 1,016 points to close at 58,649. The Nifty index gained 293 points to close at 17,469. Nifty and Sensex have gained nearly 3.5 per cent in the past two days.

Domestic investors

But the past few days of the rally has come on the back of buying support from the domestic institutional investors (DIIs) who made cash market purchases worth ₹12,531 crore this month.

S Ranganathan, Head of Research at LKP securities, said: “Positive global cues, coupled with the continuation of an accommodative policy stance of the RBI by holding rates, fired up the bulls today even as the central bank decided to enhance the variable reverse repo rate auctions to rebalance liquidity.”

Omicron fears recede

Further, markets shrugged Omicron fears as recent reports suggested that the variant currently does not appear to cause more severe disease than previous Covid variants, and is not likely to fully dodge vaccine protections.

But FPIs have been cautious on India’s stock markets for the past several months since the data suggest that the large part of the rally has been a result of the domestic buying, analysts said. This year, FPIs have made direct equity purchases worth ₹28,422 crore.

But analysts say secondary market buying is very low since a huge portion of this year’s FPI fund flows has also gone into the IPOs and other primary market instruments. In December, FPIs made net purchases in the index futures worth ₹450 crore and ₹3,965 crore in the stock futures segment, provisional data showed.

On Wednesday, all the sectoral indices on the BSE, including PSU bank, auto, IT indices rose by 2 per cent each. BSE MidCap and SmallCap indices gained over 1 percent each.

“Nifty has broken out of the downward channel. It should continue higher on short covering in derivatives especially above 17,500 where maximum call writing exists,” said Rohit Srivastava, chief strategist, Indiacharts.

As markets started gaining ground, the primary markets too came back to life. The IPO of RateGain Travel Technologies, which provides travel and hospitality solutions, was subscribed 56 per cent as of 1:15 pm on Day 2, largely on support of retail investors. The retail investors portion was subscribed by 3.11 times of the portion set aside for them.

Published on December 08, 2021

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