Nifty reclaims 8,100 mark as IT, pharma stocks surge

The benchmark equity indices kicked off December series of derivative contracts on a strong note riding on the gains in IT and pharma stocks, which rallied thanks to rupee's record fall yesterday against the dollar. 

The positive trend seen in Asian markets, after the relentless rally in the dollar halted on account of Thanksgiving break in the United States, also contributed to the gains.

At 03:58 pm, the S&P BSE Sensex was trading at 26,307, up 447 points, while the broader Nifty50 was quoting 8,112, up 146 points.

Market breadth turned exceedingly strong with 2,005 advances over 543 declines on the BSE.

"With 7,900 continuing to arrest downside attempts, a few more upswing attempts could be expected. The 8,100-8,130 may test the upside conviction, and it would be prudent to back more longs only until above 8,186. Alternatively, fall below 7,900 could call for 7,800 initially, but further downside prospects are not clear," said brokerage Geojit BNP Paribas in a technical note. 

The respite for the market, however, may be short-lived with dollar resuming its climb after the holiday as investors bet that President-elect Donald Trump will adopt policies that spur higher growth and inflation. This has also strengthened the prospects of US Federal Reserve hiking interest rates in its policy meeting next month, sucking liquidity from the emerging markets, including India. 

Back home, foreign investors sold equity shares worth Rs 2,010 crore on Thursday, while domestic investors were net buyers to the tune of Rs 1,648 crore.

Sectors and stocks

IT stocks hogged the limelight with BSE IT index rising over 4%, led by gains in Infosys, TCS and Wipro after the rupee touched its record low on Thursday against the dollar. Export-driven businesses such as information technology and pharmaceutical earn more revenues on rupee depreciation as every dollar earned through exports means more rupees added to their bottom line.

"Going into the next expiry, we saw rollovers in IT names higher compared to previous expiry and these stocks have shown relative strength in this volatile phase. Given the tailwind from a weaker rupee, we could witness outperformance from this sector going forward," said S Hariharan Head - Sales Trading Emkay Global Financial Services.

Shares of metal companies were trading higher for the fourth straight trading session with Hindalco Industries, Hindustan Zinc and National Aluminium Company (Nalco) hitting their respective 52-week high on the BSE in intra-day trade.

Most steel stocks such as Tata Steel and Jindal Steel were also trading in the green after the government imposed anti-dumping duties on hot-rolled flat sheets and plates of alloy or non-alloy steel to curb cheaper imports into the country. 

Talwalkars Better Value Fitness Limited (TBVFL) was up 6% to Rs 240 after the company announced that the board approved the demerger of Gym business into separate company Talwalkars Lifestyles Limited (TLL).

Rupee recovers from all-time lows

Snapping its five-session long losing streak, the rupee recovered to as low as 68.36 in the late morning deals after the Reserve Bank of India intervened heavily in the morning trade to arrest the currency's fall. 

The rupee fell to a record low of 68.8650 on Thursday, pressured by a rallying US dollar, capital outflows from emerging markets, and worries about the country's demonetisation drive.

November expiry worst in 15 months 

Stocks suffered their worst setback in 15 months in the November futures and options (F&O) series that concluded on Thursday.  The benchmark Nifty fell 7.5%, most since the August 2015 derivatives series. The derivatives contracts expire on the last Thursday of every month.

Traders rolled over 59.5% November Nifty index futures with next month’s series. Nifty rollovers were lowest in four months. Bank Nifty rollovers stood at 60.5%, the lowest since July 2015. The overall market rollover rate stood at 81.6%, in line with the past three months.

Derivatives experts said rollovers were high in information technology (IT) stocks as they are expected to do well if weakness in the rupee persists.

Global markets

Asian stocks steadied on Friday as the Thanksgiving break in the United States pegged the dollar's relentless surge that had sucked capital out of most emerging markets.

MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.05% on Friday. It is poised to end the week 0.8% higher, but remains down almost 2% from its close on Nov. 8 before Donald Trump's surprise election to president, whose protectionist campaign promises are widely seen as negative for the region.

Broader emerging market stocks have also taken a hit, with the MSCI Emerging Markets index down 0.5% on Friday. Although the index is up 0.9% for the week, it remains 5.6% below its Nov. 8 closing price.

Wall Street was closed on Thursday for the Thanksgiving holiday and trading will end early on Friday.

European markets ended on a positive note, with the Stoxx 600 index gaining 0.3% at the close.

The dollar index, which tracks the greenback against a basket of six major global peers, climbed 0.1% to 101.84 early on Friday, after touching 102.05, the highest level since March 2003, on Thursday.