Sensex reclaims 40K as FPIs pump in $1 b in a day

Our Bureau Mumbai | Updated on October 30, 2019

Better-than-expected corporate earnings, too, boost sentiment

Foreign portfolio investors are back with a bang in India’s stock market.

On Wednesday, they purchased stocks worth around $1 billion or ₹7,192 crore, a record for 2019, in a single trading session ahead of the October month equity derivative expiry, provisional data from exchanges showed.

On Tuesday, after the long Diwali weekend, FPIs bought stocks worth around ₹800 crore. In the derivatives segment, the final data could add more to the number of stock purchased for both days.

All talk of a slowing economy appears to be on the back-burner for now in the stock market, fund managers told BusinessLine. News reports heralding equity market related tax sops, and a global rally in stocks are driving the bull run on Dalal Street. Sensex reclaimed the 40,000 mark and closed at its third highest level ever on Wednesday. Better-than-expected corporate earnings on the back of the recent tax rate-cut have boosted market sentiment.


Big gains

The Sensex gained 220 points, or 0.55 per cent, to close at 40,051 on Wednesday. The Nifty index rose 57 points, or 0.49 per cent, to close at 11,844. The US Federal Reserve’s interest rate meeting on Wednesday is expected to drive the equity sentiment further globally, experts said. The US Fed had cut rates for the third time this year.

A resolution of the US-China trade appearing imminent too boosted market sentiment globally.

“We continue with our bullish stance on Nifty and believe the index is likely to hit new all-time high levels,” said Amit Shah, Technical Research Analyst, Indiabulls Ventures. “Markets are much healthier than before as there is broader participation unlike the previous phase last year, when Nifty hit all-time highs,” Shah said.

Heavy buying interest was seen in public sector banks. SBI, PNB and Bank of Baroda gained 3-3.5 per cent. India’s 10-year bond yield cooled to 6.489 per cent, which helped corporates.

News reports suggest that after the corporate tax-cut, the government is now looking to do away with the dividend distribution tax and even the long-term capital gains tax, both of which have been sentiment spoilers. It is also likely that the government will rationalise the structure of the securities transaction tax, reports suggested.

Analysts say that markets were happy at the government’s willingness to respond to the economic slowdown. News reports also suggested that a package to cut personal income tax was on cards mainly to boost the demand side of the economy.

Published on October 30, 2019

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