Mumbai: Following the US Federal Reserve’s rate cut that resulted in Indian benchmark indices soaring to record levels on Wednesday along with all major global indices, domestic stocks pertaining to interest rate-sensitive sectors such as real estate, IT and automobile continued to move sharply in Thursday’s trading.
The real estate index was the biggest gainer across all sectoral indices on the Bombay Stock Exchange (BSE). While all other indices ended the day with gains or
loss of 2%, BSE Realty index went up more than 6.8%. BSE IT index, the sector maximum affected by the strengthening of the Indian currency, was the worst performer, down over 2.24%.
Topping the list: The real estate index was the biggest gainer among the Bombay Stock Exchange’s sectoral indices on Thursday.
However, the Sensex, the benchmark index of BSE, and the broader 50 stock Nifty index of the National Stock Exchange (NSE) ended relatively flat after hitting their all-time highs on Wednesday. All major Asian markets except China, saw a relatively flat day of trade on Thursday. The Chinese benchmark index that was the lone loser among major global markets, bounced back, adding about 1.4%.
Unitech Ltd, the country’s second largest real estate company and the latest entrant on the Nifty index, was the largest gainer in the sector on BSE, up by 12.43%. Indiabulls Real Estate Ltd was the second largest gainer in the pack, up by about 10%. DLF Ltd, the largest real estate company also gained about 5.13%.
In BSE Auto sector, Mahindra& Mahindra Ltd and Bharat Forge Ltd, both up by about 4% each, were the largest gainers. Escorts Ltd and TVS Motor Ltd also gained more than 3%, while Bajaj Auto Ltd and Maruti Suzuki India Ltd ended the day with losses.
The rate-sensitive sectors, real estate and auto are riding the feel-good verdict of the US Federal Reserve, said Amar Ambani, research head at India Infoline Ltd. “I do not see much upside for these sectors from their current levels. The market is now trading at higher levels. One has to be cautious while taking calls,” notes Ambani.
Wednesday’s trading, foreign institutional investors (FIIs) emerged as big buyers, accumulating Indian equities worth about Rs2,457 crore, while the domestic institutions were net sellers of about Rs328 crore. According to analysts the FII inflow is bound to increase in the short run in the wake of interest rate cuts in the US.
However, the market has already discounted the prices of major technology stocks, anticipating further sharpening of the rupee against the US dollar, said Siddharth Purohit, IT analyst with Mumbai-based Way2Wealth Securities Pvt. Ltd. “Large IT counters like Infosys, TCS and Wipro do not have much downside in their current prices,” he added.
Among the 12 listed technology firms that form the BSE IT index, Patni Computer Systems Ltd that gained significantly in the past few weeks on sale speculation, lost more than 4%.
The leading IT counters such as Infosys Technologies Ltd, Tata Consultancy Services Ltd and Wipro Ltd recorded losses in the range of 2.12% to 3.4%. Tech Mahindra Ltd, the telecommunications outsourcer was the largest loser, shedding about 4.2%.