Kicking off a new week on a bullish note, Indian equity benchmarks jumped by more than 1 per cent on Monday with the Sensex soaring by over 300 points and the Nifty surpassing the psychological level of 7,700 as the government’s decision to cut interest rates on small savings further bolstered speculation of a rate cut by the Reserve Bank of India (RBI) at its upcoming policy meet on April 5.
Marking a second straight rally, the 30-share Sensex jumped by 332.63 points or by 1.33 per cent to end at 25,285.37, while the Nifty closed at 7,704.25 up by 99.9 points or by 1.31 per cent.
The BSE Sensex touched intraday high of 25,327.45 and intraday low of 24,988.27. The NSE Nifty touched intraday high of 7,713.55 and intraday low of 7,617.7.
The country’s central bank is poised to cut the repo rate by at least 25 basis points next month as softening consumer inflation, coupled with the government’s decision to maintain fiscal prudence in the Union Budget leave more leeway for policy easing to help buoy demand and revive investments in Asia’s third biggest economy. Moreover, a reduction in the rate offered on small savings schemes, which are seen competing with term deposits offered by banks, also pave the way for further softening of borrowing costs.
Sentiment was also boosted after the Foreign Investment Promotion Board (FIPB) has given the green signal to 15 FDI investment proposals worth Rs 7,262 crore including that of Japanese insurer Nippon Life Insurance, Tata AIA and Aviva Life.
The top gainers of the BSE Sensex pack were Hindustan Unilever Ltd. (Rs. 880.35,+4.05%), State Bank of India (Rs. 196.65,+2.93%), Sun Pharmaceutical Industries Ltd. (Rs. 835.65,+2.42%), Larsen & Toubro Ltd. (Rs. 1227.80,+2.38%), Tata Motors Ltd. (Rs. 374.55,+2.36%), among others.
On the Sectoral front, consumer goods and capital goods advanced 2.01 per cent and 1.80 per cent, respectively.
The Market breadth, indicating the overall health of the market, was strong. On BSE out of total shares traded 3061, shares advanced were 1615 while 1246 shares declined and 200 were unchanged.
In Asia, China’s Shanghai Composite surged by more than 2 per cent to a two-month high and Hang Seng ended tad higher, as policymakers vowed to loosen curbs on the Chinese stock market. China Securities Finance Corp. stressed that it will boost lending to brokerages for their margin trading business in measures aimed at boosting the country’s stock market which recently fell prey to a rout and leverage more than halved from last year’s peak. Japan’s Nikkei 225 was closed for a holiday.
Tag: Shanghai Composite index
On Monday, 21 September 2015, European and U.S. stocks have recovered some of the losses that they incurred the previous week thanks to inaction on the part of the Federal Reserve. At the same time, the dollar made an improvement along with a rebound from oil prices.
There was a moderate risk-on mood on the government bonds in Europe as well as USA. Gold, on the other hand, ended its three day run of gains.
The Conditions in the Various Stock Markets
In New York, there was a rise of 0.5% in the S&P 500 equity index culminating in 1967 that brings it near to 1995, the mark at which the preceding Wednesday’s market closed. The following day, the Federal Reserve scared the global markets with its cautious comments on the global economy health.
There was a decrease by 75 in the CBOE volatility index in late trade. However, it has still somehow managed to hold on to the long-term average of 20. This level is currently being viewed as a signal of the increased pressure on Wall Street.
The Condition in Europe
In Europe, an increase of 1% was noticed in FTSE Eurofirst after it had seen a decrease of 1.9% on Friday, 18 September 2015. On the other hand, in Franfurt, the Xetra Dax fell behind with only a 0.3% increase. However, this has been primarily due to the 18% fall for Volkswagen shares. The dip came after the carmaker had admitted that the company had emissions tests rigged in the US.
The mood in Europe was improved somewhat after the Shanghai Composite index made a late rally. The Shanghai Composite index closed 1.9% higher which was the second consecutive gain for the index.
The news in Greece was not very good as stocks fell by 0.6%. This came after the Syriza Party, led by Alexis Tsipras, won an emphatic victory in the Greek general election. The performance of the bond market was better as the yield on Greek debt fell 50 basis points and reached 10.31% as per reports from Bloomberg. The Greek debt is due in July 2017.
However, analysts have mentioned that the election result is most likely not going to have a significant impact on the euro. This is due to the resilience of the euro to the uncertainty that hung over Greece this summer. Morover, it was Alexis Syriza who had helped Greece with the most recent bailout program.
According to Chris Turner, the head of foreign exchange strategy of ING, the euro is more likely to be influenced by the different speakers of European Central Bank. This comment was amply backed up by the chief economist of the ECB, Peter Praet who stated that the bank was ready to change its quantitative easing program if economic turbulence brought about the need for fresh action.
The prospect of an increased policy divergence between the US and the eurozone was responsible for a decrease of 1% of euro against the dollar which was brought down to $1.1194. That, in turn, improved the dollar index by 1.1% to 95.86.