Sensex at closing

Sensex at closing

Sensex soars 337 points on ECB’s bond-buying plans

Sensex soars 337 points on ECB’s bond-buying plans

Mumbai: India’s main stock index climbed 1.95% on Friday, its biggest single-day percentage gain since 29 June, tracking strong global markets after the European Central Bank’s (ECB) commitment to bond-buying plan revived appetite for risk.

Sensex at closing

Gains in blue chips led by Reliance Industries Ltd (RIL), which rose after CLSA said it is “time to cut under-weight" on the stock, also helped the indexes.

Indian stock markets are keenly watching if the government can push forward foreign direct investment and fuel price hike via executive decisions as the monsoon session of the deadlocked Parliament ends on Friday.

Investors’ anxiety is seen rising, as prolonged wait for much touted reform measures is expected to gather further pace next week, ahead of the Reserve Bank of India’s (RBI) policy meeting on 17 September.

“Today’s jump is just ECB effect, but any falls in the next couple of days would be buying opportunity, as I think Chidambaram would achieve reforms on fuel price hike, GAAR (general anti-avoidance rules) and retro tax in September," said Deven Choksey, managing director, KR Choksey Securities.

“Reforms have to come ahead of RBI meet otherwise the bank will not ease. RBI has very clearly communicated that government has to do its part on reforms before it eases," Choksey added.

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The BSE’s benchmark Sensex index rose 1.95% to end at 17,683.73 points, marking its second day of gains.

The 50-share Nifty index of the National Stock Exchange (NSE) ended up 1.98% at 5,342.10 points, closing above its psychologically important 50 day-moving average of 5271.41 points.

Markets also await key macroeconomic data next week. July industrial output data to be released on 12 September and August headline inflation on 14 September.

Data points will also be key ahead of RBI’s monetary policy review on 17 September.

Markets expect July Index of Industrial Production growth of around 0.3% while August inflation is seen around 7%.

Indian stock trading in both the BSE and the NSE will be opened for 1-1/2 hours on Saturday, 8 September, as the BSE is testing its disaster recovery software.

Trading will start at 11.15am India time and end at 12.45pm for both exchanges.

CLSA in a report said under-weight trade on RIL is over due to a combination of growth, benign consensus expectations, below-average valuations and buy-back support. Shares in RIL rose 3.1%.

Nomura said about 28% of Bharat Heavy Electricals Ltd’s (Bhel) order book is at risk of cancellation or deferment due to either non-availability of coal linkage or cancellation of existing linkage, following the coal allocation scam, popularly dubbed “Coalgate". Shares in Bhel ended 1.9% higher.

Deutsche Bank upgraded India Cements Ltd to “buy" from “hold", while cutting its target price to 106 from 120, citing favourable risk-reward on attractive valuations and improving returns on equity profile. India Cements ended 3.6% higher.

Infosys Ltd, under its new strategy, will focus more on higher-value software and consulting that can be applied across clients and less on labour-intensive plain vanilla outsourcing services. Infosys rose 2.7%.

Shares in oil marketing companies including Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL) extended fall after oil minister S. Jaipal Reddy said there was no immediate plan to raise fuel prices.

Shares in HPCL fell 1.96%, BPCL fell 0.6%, while Indian Oil Corp. Ltd ended 0.3% higher. Reuters

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