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Economic reforms, value buying lift key equity indices


Mumbai, June 20

Economic reforms, along with value buying and higher global equity markets, lifted key domestic indices on Monday.

The equity markets opened on a downside prompted by news of Reserve Bank of India (RBI) Governor Raghuram Rajan formally declining a second term. However, they pared their early losses to close the day's trade in the green.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) edged up by 68.30 points, or 0.84 per cent, at 8,238.50 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 26,497.11 points, closed at 26,866.92 points -- up 241.01 points or 0.91 per cent from the previous close at 26,625.91 points.

The Sensex touched a high of 26,885.49 points and a low of 26,447.88 points during the intra-day trade.

The BSE market breadth was tilted in favour of the bulls -- with 1,385 advances and 1,193 declines.

Both the key Indian indices ended in the green on Friday, following positive global cues and value buying. The barometer index had surged by 100.45 points or 0.38 per cent, while the NSE Nifty had risen by 29.45 points or 0.36 per cent.

Initially on Monday, the equity markets opened on a flat-to-negative note in the face of RBI Governor Rajan declining a second term and major upcoming referendum in Britain on whether or not to stay in the European Union (EU).

Further, investors were concerned about the US Federal Reserve Chairwoman Janet Yellen's testimony to the US Congress.

However, value buying after the initial downside lifted prices. Besides, higher Asian and European markets buoyed domestic indices.

In addition, investors cheered after the government made announcement of major reforms in foreign equity norms, notably in aviation, pharmaceuticals and food processing sectors.

A stable rupee after it fell to a low of 67.70 also helped restore investors' risk-taking appetite. The rupee opened on a weak note as investors reacted to the news on Rajan's exit. 

It touched a low of 67.70 against a US dollar, but sales by exporters and sovereign intervention pushed it back below 67.40 levels on spot.

"All in all, we do not expect much of negative impact of the news of Rajan on the rupee over the short term. Market would be now keeping a close eye on the new appointment," said Anindya Banerjee, Associate Vice President for Currency Derivatives with Kotak Securities.

The Indian rupee weakened by 0.23 paise during the day's trade. It closed at 67.31-32 against a US dollar from its previous close of 67.09 to a greenback.

"Value buying after a lower opening helped markets recover," Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services, told IANS. 

"Even the healthy rise in Asian stocks, higher global crude oil prices, government's decision to ease FDI norms and a strengthening rupee too pushed up prices."

Dhruv Desai, Director and Chief Operating Officer of Tradebulls, said that aviation stocks rose on the back of increase in FDI limits into the sector.

"IT and pharma sector stocks traded firm on positive USD/INR prices. Banking sector stocks traded with mix sentiments on profit booking," Desai said.

According to Nitasha Shankar, Senior Vice President for Research with YES Securities, broader markets ended trade in the positive territory. 

"Auto, IT, realty, metal and PSU bank indices surged in trade," Shankar said.

In terms of investments, the foreign institutional investors (FIIs) were net sellers during the day's trade, while the domestic institutional investors (DIIs) turned net buyers.

Data with stock exchanges showed that the FIIs divested stocks worth Rs 537.46 crore, whereas DIIs divested scrip worth Rs 724.06 crore.

Sector-wise, all the sub-indices except FMCG (fast moving consumer goods) witnessed healthy buying.

The S&P BSE automobile index augmented by 287.48 points, followed by the IT index, which surged by 226.25 points; and the capital goods index gained by 180.94 points.

On the other hand, the S&P BSE FMCG index dipped by 4.74 points.

Major Sensex gainers during Monday's trade were Tata Motors, up 3.98 per cent at Rs 481.65; Tata Steel, up 3.27 per cent at Rs 336.15; Bharti Airtel, up 2.60 per cent at Rs 364.95; Infosys, up 2.57 per cent at Rs 1,208.60; and Tata Consultancy Services (TCS), up 2.00 per cent at Rs 2,655.70.

Major Sensex losers during the day's trade were Asian Paints, down 0.60 per cent at Rs 991.90; Coal India, down 0.46 per cent at Rs 311.90; Axis Bank, down 0.39 per cent at Rs 524.65; Sun Pharmaceuticals, down 0.37 per cent at Rs 740.05; and ITC, down 0.35 per cent at Rs 358.30.