Markets recovered in afternoon trades as buying emerged in beaten down IT stocks as they would benefit the most from depreciating Rupee. The Sensex was around 16,288, down 70 points and the Nifty was at 4,903, down 20 points.
Earlier in the day, the markets opened on a weak note as downbeat outlook by the US Federal Reserve prompted investors to flee from riskier assets. The Sensex touched a low of 16,052 around noon, but buying in IT and FMCG stocks helped the index reverse trend. Bourses stabilized in Europe as well after yesterday’s battering.
In Asia, markets ended in the red, but were off day's low after Group of 20 nations promised to support Europe's flagging financial system. The Hong Kong’s Hang Seng Index declined over 1%, the Shanghai Composite Index closed down 0.4% and South Korea’s Kospi Composite closed down 6%. Markets in Japan were closed on account of Holiday. In Europe, the CAC40, DAX and FTSE 100 were trading higher, between 0.6-0.7% each.
On the Sensex, TCS and Bharti Airtel, wereu p over 1% and State Bank of India advanced 2%, the heavyweights have helped the Sensex recover by 35 points. However, losses in HDFC Bank, HDFC and Larsen & Tourbo, down between 1-3% each, continued to weigh on the index.
Buying emerged in IT stocks as Rupee declined to 28 month low of Rs 49.5 per dollar. Indranil Pan, Chief Economist from Kotak Mahindra Bank said, Rupee could witness further bias and test 50.2 levels because of the flight to safety which has led to the dollar supply squeeze.
Analysts said margins of IT companies will improve in case they are able to lock in the dollar rupee exchange rate around the current levels. Mphasis has surged 5%, HCL Technologies and Patni Computers were up between 1-2% each.
FMCG shares were also leading the gains; Tata Global, Marico and Colgate Palmolive were up between 0.7-1% each.
Market breadth is negative 1785 stocks are declining for 858 advancing shares.
