MUMBAI: Indian benchmark stock indices rose 0.8 per cent on Monday, snapping their three-session losing run as the governments move to take over IL&FS alleviated frayed investor sentiment. The benchmark Nifty reclaimed the 11,000-mark as traders unwound their short positions ahead of the NCLT judgment, which allowed the government to supersede the board of IL&FS after trading hours on Monday. The RBIs decision to pump additional liquidity into the system also boosted the sentiment.
This development surrounding the debt-laden infrastructure lender, which had rattled financial markets due to default on its payments, has lifted market spirits but the relief may be temporary as the broader markets continue to be largely weak. The government has taken measures to lift the market sentiment of late, with the latest measure being reduction in the governments borrowing programme, but market participants believe risks of fiscal slippage remain.
The benchmark indices spent a better part of the day in the red, but the IL&FS news prompted traders to cut their short bets. The Sensex ended up 299 points, or 0.83 per cent, at 36,526.1 and the Nifty climbed nearly 78 points, or 0.71 per cent, to close at 11,008.3.
The BSE MidCap index managed to recoup losses in the last hour of trade to end up 0.5 per cent at 14,840.7. The SmallCap index ended down 0.2 per cent, off its session-low of nearly 3 per cent.
Foreign Portfolio Investors net sold Indian shares worth Rs 1,700 crore and Domestic Institutional Investors net bought shares worth Rs 3,256 crore, provisional data showed.
“The RBIs OMO decision is the only positive factor that has happened, which will ease short-term liquidity. This is a relief rally where investors have cut short positions, nothing more,” said Nischal Maheshwari, CEOinstitutional equities & advisory at Centrum Broking.
The Reserve Bank of India has decided to buy Rs 36,000 crore worth government bonds under open market operations in October. Yields dropped sharply on Monday in the bond market as a result.
Meanwhile, a closer look in the smallcap space reveals that while the index may have recouped most losses, individual stocks are facing deep cuts. Shares of PC Jeweller, Vivimed Labs, J Kumar Infraprojects and A2Z Infra Engineering tumbled 10-20 per cent on Monday.
Bandhan Bank was also in the spotlight as the lenders stock ended at the 20 per cent lower-circuit atRs 451.20 after the Reserve Bank of India barred it from opening new branches and froze its chief executives salary.
Infibeam Avenues rebounded 14 per cent to end at Rs 67.15. Fridays session had seen 70 per cent of the companys stock price being eroded after a WhatApp message which was being circulated raised concerns over the companys accounting practices.
YES Banks shares surged 9.7 per cent to end at Rs 201.20 after losing nearly 47 per cent in September. Tata Consultancy Services, State Bank of India, ICICI Bank and Housing Development Finance Corp ended up 2.7-3.3 per cent.
The Reserve Bank of Indias fourth bi-monthly monetary policy statement, due on Friday, will now be keenly watched by the market for cues on interest rate action and outlook going ahead.
Besides, movement in oil prices and the Indian currency will be the key triggers for the market.