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BSE Sensex ended 376 points higher at 40,522.
BSE Sensex ended 376 points higher at 40,522.

Indian markets shine today. Sensex rally, MSCI rejig in 10 points

  • Morgan Stanley said in a note it expects the MSCI India index to see passive inflows of $2.5 billion following the changes.

Indian stock markets ended higher today on hopes of higher foreign fund inflows into local markets after MSCI said it would revise its global indexes to reflect changes in the country's foreign ownership limits. The news helped the domestic market buck broader weakness due to worries over rising coronavirus cases globally.

The NSE Nifty 50 index closed up 1.03% at 11,889.4, while the S&P BSE Sensex ended 376 points higher at 40,522.1.

Here are 10 things to know about today's market performance:

1) MSCI said it would will implement changes in foreign ownership limits in the MSCI global indexes containing Indian securities in November. Indian securities depositories NSDL and CSDL in April revised foreign investor ownership limits for Indian stocks, but MSCI said in June it was awaiting further clarifications from the depositories before making changes to indexes.

2) Morgan Stanley said in a note it expects the MSCI India index to see passive inflows of $2.5 billion following the changes. It also listed Kotak Mahindra Bank and IPCA Laboratories as potential inclusions to the index.

3) "Possible fund inflows due to the MSCI rejig kept the sentiments buoyant in India. Morgan Stanley expects MSCI India to see passive inflows worth $2.5 billion, and its weight in MSCI Emerging Market to increase to 8.7% from 8.1%. Also as per UBS AG and State Street Global, Indian stocks provide a good hedge in portfolios ahead of the U.S. presidential election, thanks to a domestically-oriented economy," said Deepak Jasani, Head of Retail Research, HDFC Securities.

4) Indian stocks provide a good hedge in portfolios ahead of the U.S. presidential election, thanks to a domestically-oriented economy. That’s according to UBS Group AG’s wealth-management arm and State Street Global Markets, which are among firms recommending Indian shares even beyond the Nov. 3 vote, as they expect the $2.1 trillion stock market to be relatively insulated from the election outcome and Sino-U.S. trade tensions.

5) Kotak jumped over 12% today, helping the Nifty private banking index rise about 3%. IPCA Labs gained 12%.

6) But some analysts remain cautious. "Forecast of higher FII inflows to India, based on MSCI report, by raising investment limits helped the market to strongly outperform despite a weak global market. The sustenance of such a trend is low given increasing concerns over worsening spread of virus in western world which has weakened their markets for further correction," said Vinod Nair, Head of Research at Geojit Financial Services.

7) "Indian market is expected to follow with an increase in volatility in the coming days as we are heading closer to the US election and more economic restrictions due to the devastating rise of Covid cases," he added

8) Technically, "Nifty needs to cross 11900-11950 in order to generate early buy signals and thereafter we can expect the index to achieve 12200-12300," said Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.

9) "Breaking of 11700 would indicate a fresh wave of sells which could drive the index down to 11400-11450," he added.

10) Ajit Mishra, VP - Research, Religare Broking Ltd says the "rebound in Nifty indicates that the prevailing consolidation phase will continue and we might have to wait for the next directional move."


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