NEW DELHI: Stocks are slowly but gradually getting on to a steadier footing. The strong bounceback was visible on Wednesday as the Sensex rallied over 400 points and the NSE barometer Nifty retook the 10,400 level.
After all the turmoil, investors today went about covering their short positions.
Let's take a look at why the local shares jumped even as Asian cues turned lacklustre.
Rupee off record low
After falling over 14 per cent so far this year, the rupee rebounded today. This is seen as a thumbs up to RBIs announcement of Rs 12,000 crore open market operations (OMO) on October 11 to manage liquidity in the financial system.
The government will purchase bonds with maturity ranging 2020-30, the RBI said in a statement. This along with a drop in crude oil prices helped the local currency gain 26 paise to 74.11 on Wednesday over its record low closing of 74.39 on Tuesday.
The announcement was anticipated, said Lakshmi Iyer, CIO-Fixed Income and Head-Products at Kotak MF. To that extent, markets will probably get some bit of psychological comfort. "The key to watch is whether it will be short lived or will be sustained. I am not very sure as yet," she told ETNow.
Banking stocks in-charge
Gains in HDFC Bank, ICICI Bank, HDFC, Kotak Mahindra Bank, Axis Bank, IndusInd Bank, SBI and YES Bank contributed most to the Sensex's rise on Wednesday. Technically, the bank Nifty50 index, which closed at 24,527.65 on Tuesday, broke its immediate resistance of 24,750 to extend its bounce towards the 25,000 level.
Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Financial Services, said a breach above 25,000 on a sustainable basis may open door to 25,250 for the index. Downside support is placed at 24,250, he said.
Crude prices ease
Brent crude futures were trading below $75 a barrel mark after the IMF lowered its global growth forecast. Losses though were capped by Hurricane Michael, which churned towards Florida. Brent crude futures were down 21 cents at $84.79 a barrel, after a 1.3 per cent gain on Tuesday, Reuters reported.
US West Texas Intermediate (WTI) crude was down by 34 cents, or 0.5 per cent, at $74.62 a barrel, after rising nearly 1 per cent in the previous session.
Hopes of foreign inflows
A Sebi expert panel is set to propose liberalised rules establishing a fast-track registration process for FPIs besides allowing them to invest in different classes of securities having more flexible structures, a person close to the development told ET. The panel headed by former Reserve Bank of India deputy governor H R Khan is also planning to expand the range of securities that FPIs can participate in and allow them to set up shop in the Gujarat International Finance Tec-City (GIFTIFSC), ET reported.
FPIs have sold Rs 26,104 crore worth of equities so far in 2018.
Moodys clears the air
In an interview to Tanvir Gill of ETNow, Gene Fang, Associate Managing Director – Sovereign Risk Group at Moodys Investors, said that while excise duty cuts on fuel is credit negative, it does not necessarily mean the entire reading outlook is changing.
“I mean we saw the stable outlook on the overall rating, but the fiscal targets were one of the primary factors that we have been watching since the upgrade last year. This slippage right here is not that material and it is not necessarily changing our overall view on the outlook, but we do think that this is one of the key factors that we are looking for in terms of what we see as improved effectiveness around managing the Budget,” Fang said.
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