 "Expect strong returns in new Samvat")
Snapping previous session’s losses, the benchmark indices on Friday staged a smart recovery led by gains in IT and pharma stocks after the rupee on Thursday hit its all-time low against dollar. Positive global cues as dollar retreated from 14-year high mark also added to the gains.
The S&P BSE Sensex settled the day at 26,316, up 456 points, while the broader Nifty closed at 8,114, up 149 points. In broader markets, BSE Midcap was up 1.3% while smallcap ended 2% higher.
“Markets ended the day with about 2% gains and took the markets back in the green for the week as well as for the calendar year. The rise was led by bargain hunting at lower levels and sentiment was buoyed by the rupee, which remained stable. We believe that, foreign funds have been flowing out because of the weakness in the rupee, apart from concerns about a slowdown in the economy. The recent fall in markets has made led to sizeable losses in prices of several stock and one must identify fundamentally sound stocks and accumulate them with a long term perspective,” said Dipen Shah, Senior Vice President & Head PCG Research, Kotak Securities.
RBI said in a press release today that exchange of banned notes will continue at RBI counters after the Centre yesterday announced that it would no longer allow over-the-counter exchange of old Rs 500 and Rs 1,000 notes from Saturday.
Reports also said that government might impose curbs on domestic holdings of gold as PM Narendra Modi intensified the government's fight against black money.
Here are three reasons why market surged in today’s trade:
IT, pharma and metal stocks hog limelight
Export-driven businesses like information technology (IT) and pharmaceutical rallied on the index today after rupee touched its record low on Thursday. These stocks earn more revenues on rupee depreciation as every dollar earned through exports means more rupees added to their bottom line.
NSE IT was the top sectoral gainer and settled the day at 10,115 points, 4.75% higher, with TCS, Infosys and Tech Mahindra gaining 5.9%, 4.77% and 5.83% respectively .
"Today, the It Index gave the breakout of three week high of 10,110 with the next target of 10448. This makes the space attractive for the investors and hence it is suggested to keep an eye on this Index which can be a wealth creator in coming days," said brokerage Dynamic Levels in a technical note.
Nifty Pharma index ended 3% higher with Sun Pharma (4.39%) gaining the most. Other gainers included Aurobindo Pharma (4.04%) and Lupin (3.16%).
Metal companies traded higher for the fourth straight-session with BSE Metals rising more than 2% during the day. NALCO ended the day 7.74% higher followed by JSW Steel (3.62%), SAIL (2.86%) and JSPL (2.70%).
Rupee recovers from all-time lows
Snapping its five-session long losing streak, 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.
“The external factor will continue to exercise pressure until such time there is more clarity on the policies of Donald Trump that are to be implemented. The RBI has been seen to be selling dollars in the market through some state run banks to stabilize the rupee. Presently, the fall in the rupee may be welcome as it comes at a time when the exports also seem to be looking up,” said Madan Sabnavis of CARE Ratings.
Global markets gain as dollar retreat from 14-year high
Asian stocks advanced on Friday as the Thanksgiving break in the United States helped slow a relentless surge in the dollar that has sucked capital out of most emerging markets.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.5%. It ended the week neary 2% higher, its biggest weekly gain in two months.
The 10-year yield, which hit a 16-month high of 2.417 percent this week, was at 2.3915 on Friday.
European shares, however, edged lower in early trading on Friday, with weaker oil prices hurting energy stocks and Italian lenders dragging down European banking index.
